MexECON Blog

September Trade Balance Back in Surplus

Mexico's September merchandise trade balance showed a seasonally-adjusted surplus of $956.6 million, after a revised deficit of $441.1 million in August and a surplus of $475.3 million in July.  According to the report, the value of Mexican exports fell slightly to $33.417 billion in September, down 0.1% from August.  Petroleum, mineral, agriculture, and non-auto manufactured exports all rose in September, but those increases were offset by a big decline in autos and auto parts.  Meanwhile, September imports fell at the fastest pace in more than five years.  The total value of imports declined to $32.461 billion, down 4.2% from the previous month.  On an unadjusted basis, Mexican exports in September were up 9.2% from the same month one year earlier, while imports were up 9.6%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in September, they were up a strong 11.2% year-over-year.  The major manufactured goods showing the biggest increases were professional and scientific equipment, metal products, and industrial machinery and equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 7.1% year-over-year in September.  Within this category, exports of refined and processed products posted a strong increase, but the volume of Mexican crude oil exports averaged just 1.158 million barrels per day, down 3.1% from September 2013, and the average export price for Mexican crude was just $89.10 per barrel, down 10.7% from one year earlier.  Finally, Mexican agriculture exports in September were up a whopping 22.7% year-over-year.  Among the agriculture exports posting the best performances, cattle exports were up 124.7%, avocado exports were up 58.0%, and cucumber exports were up 21.0%.

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

Comment:  Rebounding exports have been boosting Mexican economic growth recently, so the second straight month of declining exports during September is somewhat disturbing.  On the other hand, September's month-over-month decline was entirely attributable to auto and auto exports, which can be volatile.  The overall trend in exports still seems positive, especially given that U.S. economic growth continues to solidify.  The recent weakness in the peso also should help buoy Mexican exports while discouraging imports.  I therefore expect that international trade will continue to support Mexican manufacturing and industrial activity in the coming months, even as the domestic construction sector continues to recover.  There have recently been some signs that the Mexican labor market has finally strengthened enough to lift consumer sentiment and retail demand, though it is not yet clear how much that sector will improve.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1409

Exports 1409

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