MexECON Blog

Exports Show Some Signs of Life

Mexico's April trade deficit widened to a seasonally-adjusted $323.3 million, after a revised March deficit of $290.2 million and a February surplus of $400.6 million.  In April, the value of Mexico's exports jumped 1.9% to a record $32.833 billion, mostly reflecting a strong increase in manufactured exports.  However, the value of Mexico's imports also rose briskly for a second straight month, reaching their own record of $33.157 billion.  The rise in imports came mostly from higher purchases of foreign consumer goods.  On an unadjusted basis, Mexican exports in April were up 3.7% from the same month one year earlier, while imports were down 1.5%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in April, they were up 7.1% year-over-year.  The major manufactured goods showing the biggest increases were industrial machinery and equipment, autos and auto parts, and professional and scientific equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 15.5% year-over-year in April.  Within this category, Mexican crude oil exports averaged 1.051 million barrels per day, down 17.6% from April 2013.  The average export price for Mexican crude was $95.02 per barrel, down 4.6% from one year earlier.  Finally, Mexican agriculture exports in April were down 0.9% year-over-year.  Among the agricultural exports posting the worst performances, cucumber exports were down 23.9%, and coffee exports were down 22.0%.  Among the agricultural exports posting the best performances, honey exports were up 46.6%, and citrus exports were up 54.9%.

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

Comment:  Mexican exports have risen at an annualized rate of 13.1% over the last three months, raising some hope that sales abroad are ready to accelerate after flattening out in 2013.  The strength in exports probably stems in large part from the recent reacceleration in U.S. economic growth after a weak spot during the winter.  If exports keep rising at a good pace, they could boost industrial activity and help offset some of the weakness in Mexican domestic demand.  However, it still seems too early to be sure.  Over the last several quarters, every month of increased exports has been followed by a month of decreased exports.  In addition, it is important to note that imports have been rising even faster than exports, and that will tend to detract from the overall economic growth rate.  For the time being, I expect the Mexican economy to keep growing at a pace that is at or below average.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1404

Exports 1404

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