MexECON Blog

December Exports Rise Slightly

Mexico's December merchandise trade deficit narrowed to a seasonally-adjusted $10.8 million, after a revised deficit of $1.108 billion in November.  According to the report, the value of Mexican exports rose to $33.203 billion in December, up 0.5% from November.  The increase came entirely from stronger foreign sales of non-auto manufactured goods, which were up just enough to offset the declines in auto, mineral, agriculture, and petroleum exports.  Meanwhile, December imports fell to $33.213 billion, down 2.8% from the previous month, mostly reflecting a big drop in consumer goods imports.  On an unadjusted basis, Mexican exports in December were up 6.4% from the same month one year earlier, while imports were up 11.2%. 

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in December, they were up 15.8% year-over-year.  The major manufactured goods showing the biggest increases were industrial equipment, autos and auto parts, and electronics and electrical goods.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down a whopping 43.7% year-over-year in December.  Within this category, the volume of crude oil exports averaged 1.237 million barrels per day, down 5.4% from December 2013.  The average export price for Mexican crude was $52.37 per barrel, down 42.9% from one year earlier.  Finally, Mexican agriculture exports in December were down 3.7% year-over-year.  Among the agriculture exports posting the worst performances, pepper exports were down 53.8%, cucumber exports were down 46.6%, and melon exports were down 44.7%.  Among the agriculture exports posting the best performances, fruit exports were up 94.5% year-over-year, while coffee exports were up 94.2% year-over-year.

For full-year 2014, Mexican exports totaled $397.536 billion, up 4.6% from 2013.  Imports totaled $399.977 billion, up 4.9%.

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

Comment:  Mexican exports continue to rise, in large part because of strengthening U.S. demand.  The recent drop in the value of the peso is probably also helping to boost exports, as the lower peso makes Mexican exports more price competitive north of the border.  Measured in dollars, export growth may have slowed, but exports as measured in pesos are accelerating.  Increased foreign sales should keep the country's manufacturing sector humming, even as the domestic construction sector continues to recover and the improving labor market buoys consumer spending.  There is some risk that low oil prices will eventually have a negative impact on government revenues and investment, and there is a possibility that rising interest rates in the United States could spark a sudden, destabilizing outflow of capital at some point.  For now, however, international trade and domestic demand are both bolstering the Mexican economy.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1412

Exports 1412

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