MexECON Blog

August Exports Rise 0.6 Percent YOY

Mexico's August merchandise trade balance showed a seasonally-adjusted deficit of $174.8 million, after a surplus of $303.6 million in July.  According to the report, released today by the official statistics agency INEGI, the value of Mexico's exports fell 0.3% in August, after a 1.4% increase in the previous month.  Imports jumped 1.2%, accelerating from a 0.2% rise the month before.  On an unadjusted basis, Mexican exports in August were up just 0.6% from the same month one year earlier, while imports were up 1.1%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in August, they were up 1.1% year-over-year.  The major manufactured goods showing the strongest export gains in August were chemicals, autos and auto parts, and scientific equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 2.0% year-over-year in August.  Within this category, Mexican crude oil exports totaled 1.347 million barrels per day, down 6.4% from August 2011.  The average export price for Mexican crude was $101.67 per barrel, up 3.0% year-over-year.  Finally, Mexican agriculture exports in August were down 5.3% year-over-year.  Among the agricultural exports posting the strongest performances, coffee exports were up 45.6%, plantain exports were up 44.7%, and cucumber exports were up 33.2%.  However, these increases were offset by some major decreases.  For example, cattle exports plunged 45.1% year-over-year in August, and tomato exports were down 32.3%. 

Comment:  With the revisions and corrections to previous months' data in today's report, we are finally seeing a clearer, more consistent view of what happened in Mexico's trade sector earlier this year.  Reaccelerating exports and strong trade surpluses in early 2012 were short-circuited in the spring by the latest worsening of Europe's debt crisis and a significant slowdown in U.S. demand.  However, Mexico quickly began to recover, with the trade deficit narrowing from $348.3 million in April to $242.3 million in May and just $59.7 million in June.  After the return to surplus in July, the swing to a modest deficit in August is not too alarming.  Mexico's trade picture would darken if the European crisis intensifies again.  However, the most likely scenario for the next few months is for the trade balance to remain in rough balance, as rebounding U.S. demand keeps exports rising but the strong momentum in Mexican domestic demand keeps boosting imports.

Patrick Fearon, CFA
Vice President, Fund Management

                                    Mexico's Merchandise Trade Balance
                                          Seasonally Adjusted, Million US$
                                                     Source:  INEGI
Trade Balance 1208

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