MexECON Blog

Exports Return to Growth in October

Mexico's October merchandise trade balance showed a seasonally-adjusted surplus of $711.7 million, after a revised surplus of $966.5 million in September.  That marked the country's first back-to-back trade surpluses since the end of 2013.  According to the report, the value of Mexican exports jumped 3.8% in October, erasing the small declines in the two previous months and reaching a record high of $34.766 billion.  Petroleum and mineral exports fell sharply, but those declines were more than offset by strong increases in agriculture and manufacturing exports.  Meanwhile, October imports jumped 4.7%, offsetting their big decline in the previous month and reaching a new record of $34.054 billion.  On an unadjusted basis, Mexican exports in October were up 5.7% from the same month one year earlier, while imports were up 4.9%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in October, they were up 9.2% year-over-year.  The major manufactured goods showing the biggest increases were autos and auto parts, electronics and electrical equipment, and industrial machinery and equipment.  Exports of autos and auto parts alone were up 18.6% year-over-year.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 21.0% year-over-year in October.  Within this category, the volume of crude oil exports averaged 1.138 million barrels per day, down 4.6% from October 2013.  The average export price for Mexican crude was just $79.93 per barrel, down 15.8% from one year earlier.  Finally, Mexican agriculture exports in October were up a very strong 24.9% year-over-year.  Among the agriculture exports posting the best performances, frozen shrimp exports were up 89.7%, cattle exports were up 44.6%, and melon exports were up 30.5%.

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

Comment:  Mexican exports have generally been strengthening in 2014, but the declines in August and September had raised some concern.  The declines were small, but they were enough to help pull down third-quarter economic growth.  Today's data showing a sharp rebound in October is therefore reassuring.  As I noted in my discussion of last month's trade data, Mexico is clearly benefitting from the ongoing recovery in U.S. demand and recent weakness of the peso.  More broadly, Mexican competitiveness versus Asian countries has improved in recent years, and the government's economic reform program could eventually make the country's factories even more powerful and help reverse the long-standing slide in petroleum output.  With exports showing renewed vigor and domestic demand starting to strengthen, it looks like the Mexican economy will continue to grow moderately in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1410

Exports 1410

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