MexECON Blog

February Exports Jump 16.3 Percent YOY

Mexico's February merchandise trade balance swung to a seasonally-adjusted surplus of $251.0 million, after a revised deficit of $339.3 million in January.  According to the report, from the official statistics agency INEGI, the improvement in February came as exports jumped 6.1%.  That was the strongest export gain since May 2004, and it was more than enough to reverse the 1.3% decline in exports during January.  Imports also rose in February, but by a more modest 4.1%, after a rise of 0.8% in the previous month.  On an unadjusted basis, Mexican exports in February were up 16.3% from the same month one year earlier, while imports were up 15.9%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in February, they were up 14.7% year-over-year.  The major manufactured goods showing the strongest export growth in February were industrial machinery and equipment, steel and metal products, and plastics and rubber.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 26.5% year-over-year in February.  On a volume basis, Mexican crude oil exports totaled 1.229 million barrels per day, down 0.4% from February 2011.  On a value basis, however, the average export price for Mexican crude was $110.51 per barrel, up 22.1% from one year earlier.  Finally, Mexican agriculture exports in February were up just 2.6% year-over-year.  Among the agricultural products posting the strongest performances, miscellaneous fruit exports were up 86.3%, while frozen shrimp exports were up 81.2%.  Global coffee prices have been cooling since mid-2011, but they are still high, and the value of Mexican coffee exports in February was up 49.4% from one year earlier.

Comment:  During the last two decades, Mexico's monthly trade balance has been in deficit more than 80% of the time.  However, the country has now had a surplus in 8 of the last 18 months, and even more impressive, it has had a surplus in 3 of the last 4 months.  Moreover, Mexico's year-over-year export gain in February was the strongest since last summer.  The recent strengthening in the U.S. economy is surely a key reason for the renewed vigor.  More broadly, improved competitiveness and stronger investment over the last decade have also positioned Mexico to make the most of increased demand from the United States.  Mexican exports are likely to keep growing in the near term unless the U.S. economy falters again or the peso strengthens dramatically.  In the longer term, Mexico's trade sector will probably face headwinds because of declining production from its aging oil fields, but that problem is farther off in the future, especially if global oil prices remain high.

Patrick Fearon, CFA
Vice President, Fund Management

                                    Mexico's Merchandise Trade Balance
                                         Seasonally Adjusted, Million US$
                                                        Source:  INEGI
Trade Balance 1202

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