Mexico's January merchandise trade deficit widened to a
seasonally-adjusted $1.781 billion, after a revised deficit of just
$105.2 million in December. According to the report, the
value of Mexican exports fell to $31.883 billion in the first month
of the year, down 3.7% from the previous month. The decline
came primarily from a sharp decrease in non-auto manufactured
goods. Meanwhile, January imports rose to $33.664 billion, up
1.4% from December, mostly on a rise in capital goods
imports. On an unadjusted basis, Mexican exports in January
were down 1.8% from the same month one year earlier, while imports
were down 1.4%.
Manufactured goods make up the vast majority of Mexico's
merchandise exports, and in January, they were up 5.6%
year-over-year. The major manufactured goods showing the
biggest increases were autos and auto parts, steel, chemicals, and
electronics and electrical goods. Crude oil and other
petroleum products are the second-most important category of
Mexican exports, and they were down 47.3% year-over-year.
Within this category, the volume of crude oil exports averaged
1.261 million barrels per day, up 7.7% from January 2014.
However, the average export price for Mexican crude was just
$40.15, down 55.7% from one year earlier. Finally, Mexican
agriculture exports in January were up 15.0% year-over-year.
Among the agriculture exports posting the best performances, frozen
shrimp exports were up 72.2%, cattle exports were up 50.1%, and
fruit exports were up 48.4%. Among the agriculture exports
posting the worst performances, chickpea exports were down 39.8%
year-over-year, and cucumber exports were down 12.3%.
The report was released today by INEGI, the official statistics
Comment: Measured in dollars,
Mexican exports have softened in recent months. In part, that
reflects an ongoing slide in Mexican oil production and continued
weakness in global oil prices. However, it also reflects a
big pullback in non-auto manufactured exports. That's
consistent with the weakness in U.S. durable goods orders at the
end of 2014, which probably stemmed mostly from U.S. companies'
caution in the face of the strong dollar, slow economic growth in
Europe and Asia, and their own rising inventories. The drop
in oil prices has also weighed on drilling activity and curtailed
the demand for capital goods related to the energy industry.
Nevertheless, there are several reasons to expect Mexican exports
to strengthen again in the coming months. Most important,
overall demand in the United States continues to improve. A
report today showed U.S. durable goods orders rebounded somewhat in
January, and rising employment and falling energy prices have
encouraged stronger consumer spending. The weakness in the
peso also should be a positive for Mexican exports going
forward. In fact, Mexican exports as measured in pesos are
clearly trending upward at a good pace. In sum, the recent
softening in international trade does not yet appear to be a major
threat to the Mexican economy.
Patrick Fearon, CFA
Vice President, Fund Management