MexECON Blog

July Exports Rise 8.7 Percent YOY

Mexico's July merchandise trade surplus expanded to a seasonally-adjusted $369.5 million, after a revised surplus of $116.7 million in June.  The June trade balance had originally been reported as a deficit.  With the revision, Mexico has now had its first back-to-back trade surpluses since late winter.  According to the report, released Friday by the official statistics agency INEGI, the value of Mexico's exports rose 1.0% in July, after three straight months of substantial declines.  Imports rose 0.2%, after two months of large decreases.  On an unadjusted basis, Mexican exports in July were up 8.7% from the same month one year earlier, while imports were up 7.8%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in July, they were up a strong 14.0% year-over-year.  The major manufactured goods showing the strongest export gains in July were autos, auto parts, and industrial equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 16.9% year-over-year in July.  Within this category, Mexican crude oil exports totaled 1.123 million barrels per day, down 8.2% from July 2011.  The average export price for Mexican crude was $94.04 per barrel, down 10.3% year-over-year.  Finally, Mexican agriculture exports in July were up 12.5% year-over-year.  Among the agricultural exports posting the strongest performances, cattle exports were up an astounding 118.0%, while mango exports were up 55.2%.  Coffee exports were up 39.9%, and avocado exports were up 15.6%. 

Comment:  The July trade report was much more positive than the June report.  Not only was Mexico's July trade surplus the biggest since March, but the return to export growth suggests the country's external environment has at least stabilized after the difficulties last spring.  Just as important, the small rise in imports is a sign that Mexico's domestic demand has maintained some momentum.  Since other recent economic reports from Mexico have also surprised on the upside, it now seems clear that the economy is rebounding from the springtime soft spot caused by the European debt crisis and slowing U.S. economic growth.  If those problems worsen again, the trade picture would darken and Mexico's economy would likely show another softening.  For the moment, however, Mexican economic growth looks set to reaccelerate again.

Patrick Fearon, CFA
Vice President, Fund Management

                                          Mexico's Merchandise Trade Balance
                                              Seasonally Adjusted, Million US$
                                                          Source:  INEGI
Trade Balance 1207

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