MexECON Blog

December Exports Rise 3.6 Percent YOY

Mexico's December merchandise trade balance swung to a seasonally-adjusted surplus of $552.2 million, after revised deficits of $226.5 million in November and $726.7 million in October.  According to the report, released today by the official statistics agency INEGI, the value of Mexico's exports fell 0.9% in December, but imports dropped 3.4%.  On an unadjusted basis, Mexican exports in December were up 3.6% from the same month one year earlier, while imports were up 0.3%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in December, they were up 8.9% year-over-year.  The major manufactured goods showing the strongest export gains in December were industrial equipment, professional and scientific instruments, and electronic goods.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 19.3% year-over-year in December.  Within this category, Mexican crude oil exports totaled 1.174 billion barrels per day, down 8.4% from December 2011.  The average export price for Mexican crude was $95.69 per barrel, down 8.8% from one year earlier.  Finally, Mexican agriculture exports in December were up 1.7% year-over-year.  Among the agricultural products posting the best performances, pepper exports were up 66.7%, citrus exports were up 33.9%, and coffee exports were up 24.4%.

Mexican exports during full-year 2012 totaled $370.915 billion, up 6.2% from 2011.  That was driven primarily by an 8.4% increase in manufactured goods and a 6.1% rise in agricultural products, offset by a 5.9% decline in petroleum.  Imports totaled $370.852 billion, up 5.7%, driven mostly by a 5.3% rise in intermediate goods and a 10.1% increase in capital goods.  That left a small surplus of $163.0 million for the year. 

Comment:  Mexican exports fell noticeably in mid-2012, but new and revised figures in today's report show exports rebounded at year's end.  The figures would have looked even better if not for an accelerating decline in petroleum receipts (the result of both falling global prices and Mexico's well-known problem with aging fields, insufficient investment, and falling production).  In contrast with the decline in petroleum, Mexico's manufacturing exports surged in late 2012.  The sharp rise in manufacturing exports helps explain why Mexico's purchasing managers index for the factory sector stood at a record high in the last two months of the year.    In fact, today's report provides welcome affirmation that Mexico's manufacturing sector is likely to keep growing well in the coming months.  That is especially true if you consider the recent improvement in employment, housing, and fiscal policy in the key U.S. market.  The prospects for Mexican manufacturing are also bolstered by this week's data showing that the country's retailers have apparently been running down their inventories, even in the face of strongly rising consumer spending, and will probably need to boost their domestic and foreign orders in the near future.  It is true that Mexican industrial production and fixed investment have flattened out or started to decline in recent months, but it now appears that those problems stem from weakness in sectors such as mining and construction, not international trade and manufacturing. 

Patrick Fearon, CFA
Vice President, Fund Management

                                     Mexico's Merchandise Trade Balance
                                           Seasonally Adjusted, Million US$
                                                       Source:  INEGI
Trade Balance 1212

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