MexECON Blog

Big Pullback in November Exports

Mexico's November merchandise trade balance swung to a seasonally-adjusted deficit of $1.064 billion, after revised surpluses of $797.6 million in October and $883.6 million in September.  According to the report, the value of Mexican exports slumped 4.8% in November, falling to $33.159 billion.  That erased the revised 4.3% export increase in October, and it marked the third export decline in the last four months.  Virtually all of the decline came in manufactured products.  Meanwhile, November imports rose 0.6%, after a 4.6% rise in the previous month.  That lifted imports to a record $34.222 billion.  On an unadjusted basis, Mexican exports in November were up 2.1% from the same month one year earlier, while imports were up 6.5%.

Manufactured goods make up the vast majority of Mexico's manufactured goods, and in November, they were up 4.0% year-over-year.  The major manufactured goods showing the biggest increases were autos and auto parts, professional and scientific equipment, and industrial equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 13.2% year-over-year.  Within this category, the volume of crude oil exports averaged 1.230 million barrels per day, up 2.5% from November 2013.  The average export price for Mexican crude was $71.64 per barrel, down 20.1% from one year earlier.  Finally, Mexican agriculture exports in November were up 8.9% year-over-year.  Among the agriculture exports posting the best performances, cattle exports were up 61.6%, fruit exports were up 37.9%, and pepper exports were up 32.2%.

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

Comment:  Mexican export growth has softened and become choppy in recent months, but I suspect it will remain positive for some time yet.  As the U.S. economy strengthens, the demand for Mexican goods will likely continue to climb.  Moreover, the recent weakness in the peso will help make Mexican exports more price competitive north of the border.  Rising exports, a recovering construction sector, and an improving labor market will almost certainly keep the Mexican economy in an expansion phase for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1411

 Exports 1411

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