MexECON Blog

May Exports Rise 6.7 Percent YOY

Mexico's May merchandise trade balance showed a seasonally-adjusted deficit of $266.6 million, after a revised deficit of $355.2 million in April.  It was Mexico's first back-to-back deficits since last autumn.  According to the report, from the official statistics agency INEGI, the value of Mexico's exports fell 1.6% in May, marking their first decline since January.  Imports fell 1.8%, after a rise of 3.6% in April and a decline of 1.4% in March.  On an unadjusted basis, Mexican exports in May were up 6.7% from the same month one year earlier, while imports were up 7.4%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in May, they were up 10.4% year-over-year.  The major manufactured goods showing the strongest export gains in May were chemicals, plastics, industrial equipment, and autos and auto parts.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 13.6% year-over-year in May.  Within this category, Mexican crude oil exports totaled 1.198 million barrels per day, down 12.4% from May 2011.  The average export price for Mexican crude was $103.11 per barrel, down 1.3% from one year earlier.  Finally, Mexican agriculture exports in May were up 13.0% year-over-year.  Among the agricultural products posting the strongest performances, cattle exports were up 59.3%, melon exports were up 24.5%, and bell pepper exports were up 22.7%.

Comment:  The modest year-over-year rise in Mexico's exports during May comes in large part from a high base of comparison.  Mexican exports posted an unusually strong increase in May 2011.  The more significant item in today's report was the month-to-month drop in both exports and imports and the second straight trade deficit.  The export and import declines could well reflect falling confidence around the world as the European debt crisis worsened again and data showed slowing U.S. job growth.  As of this writing, those problems show no sign of easing, so Mexico's international trade could continue weakening in the coming months.  On balance, the country's trade picture remains historically healthy, but the threats from abroad cannot be discounted.

Patrick Fearon, CFA
Vice President, Fund Management

                                   Mexico's Merchandise Trade Balance
                                      Seasonally Adjusted, Million US$
                                                      Source:  INEGI
Trade Balance 1205

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