MexECON Blog

August Trade Balance Swings to Surplus

Mexico's August merchandise trade balance swung to a seasonally-adjusted surplus of $495.9 million, after revised deficits of $219.5 million in July and $352.3 million in June.  The surplus in August was the first since last December.  The value of Mexican exports rose for a third straight month during August, jumping 2.3% and reaching a record $32.538 billion.  Imports were essentially flat at $32.042 billion.  On an unadjusted basis, exports in August were up 3.2% from the same month one year earlier, while imports were up 0.8%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in August, they were 6.2% year-over-year.  The major manufactured exports showing the biggest increases were steel products, food and beverages, and domestic metal goods.  Exports of autos and auto parts alone were up 16.6% year-over-year.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 13.0% year-over-year in August.  Within this category, Mexican crude oil exports totaled 1.157 million barrels per day, down 14.1% from August 2012, while the average export price for Mexican crude fell to $101.13 per barrel, down 0.4% from one year earlier.  Finally, Mexican agriculture exports in August were down 0.6% year-over-year.  Among the agricultural products showing the worst performances, frozen shrimp exports were down 68.2%, coffee exports were down 57.2%, and chickpea exports were down 55.9%.  Among the agricultural exports showing the best performances, plantain exports were up 32.8%, mango exports were up 31.5%, and melon exports were up 24.9%.

The report was released today by INEGI, the official statistics agency.

Comment:  With a range of indicators suggesting Mexico is in danger of slipping into recession, the improving trade figures provide some hope that the economy can actually keep growing.  Coupled with a slight fall in unemployment and somewhat stronger retail sales in recent months, the trade figures suggest a recession is not yet set in stone.  Even if it happens, it would probably be short and shallow.  Nevertheless, plenty of caution is still warranted.  U.S. demand is still growing relatively slowly, and renewed political bickering over fiscal policy could weaken it further.  At home, Mexico is also dealing with the damage and disruption from two September hurricanes, relatively tight fiscal policy, and stunted construction activity.  It will take a few more months of data to see whether the Mexican economy is really out of the woods.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1308

Exports 1308


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