MexECON Blog

June Trade Deficit Narrows

Mexico's June merchandise trade deficit narrowed to a seasonally-adjusted $404.1 million, after revised deficits of $511.1 million in May and $491.9 million in April.  The deficit is now at its smallest since a modest trade surplus in February.  According to the report, the value of Mexican exports was virtually unchanged at a near-record $33.310 billion in June, as increased exports of petroleum, minerals, and agricultural goods were largely offset by a decline in manufactured exports.  The value of Mexican imports fell 0.4% to $33.714 billion, reflecting decreased purchases of foreign capital and intermediate goods.  On an unadjusted basis, Mexican exports in June were up 7.7% 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 June, they were up 7.5% year-over-year.  The major manufactured goods showing the biggest increases were professional and scientific equipment, rubber and plastics, and industrial machinery and equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 5.1% year-over-year in June.  Within this category, the volume of Mexican crude oil exports averaged 1.076 million barrels per day, down 1.3% from June 2013.  The average export price for Mexican crude was $99.56 per barrel, up 1.7% from one year earlier.  Finally, Mexican agriculture exports in June were up 12.1% year-over-year.  Among the agricultural exports posting the best performances, cattle exports were up 118.5%, citrus exports were up 80.1%, and fish and shellfish exports were up 55.4%.

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

Comment:  Even though Mexican exports flattened out in June, the recent trend has been upward.  Over the last three months, exports have risen at an annualized rate of 17.5%, for their strongest performance since early 2012.  Accelerating demand in the United States is clearly having a beneficial impact in Mexico.  At the same time, recent reports suggest Mexican construction activity is at least stabilizing.  It may even be starting to rebound a bit from its steep slide over the last couple of years.  The implication is that Mexican economic growth is likely to re-accelerate in the coming months.  Nevertheless, the country's soft labor market and weak consumer spending will probably continue to limit how fast the economy can grow. 

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1406

Exports 1406

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