MexECON Blog

Exports Stabilize in February

Mexico's February merchandise trade deficit almost disappeared, narrowing to a seasonally-adjusted $43.5 million from a revised $1.815 billion in January.  According to the report, the value of Mexican exports rose to $31.917 billion in February, up 0.4%, though that erased only a small part of their 4.3% fall in the previous month.  The rise in the second month of the year came mostly from a rebound in foreign sales of petroleum and other mineral products, offset by a drop in autos and auto parts.  Meanwhile, February imports declined to $31.961 billion, down 4.9% from January, reflecting decreased imports of consumer, intermediate, and capital goods.  On an unadjusted basis, Mexican exports in February were down 2.6% 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 February, they were up 3.7% year-over-year.  The major manufactured goods showing the biggest increases were food, beverages, and tobacco; electronics and electrical goods; and professional and scientific equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 46.9% year-over-year.  Within this category, the volume of crude oil exports averaged 1.305 million barrels per day, up 3.5% from February 2014.  However, the average export price for Mexican crude was just $46.88.  That price was higher than in January, but it was 49.6% lower than one year earlier.  Finally, Mexican agriculture exports in February were up 4.8% year-over-year.  Among the agriculture exports posting the best performances, frozen shrimp exports were up 52.0%, and melon exports were up 51.5%.

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

Comment:  Measured in dollars, Mexican exports remain weak.  Falling oil production and a steep drop in global oil prices since last summer have become a major headwind.  Weaker U.S. demand for capital goods around the turn of the year has also been a factor.  In addition, Mexican auto exports have now fallen in three of the last four months, suggesting the post-recession recovery in the North American auto market may finally be running its course.  Nevertheless, I continue to believe that the ongoing improvement in the U.S. labor market and the current weakness in the value of the peso will keep boosting the demand for Mexican goods.  In fact, exports as measured in pesos remain on a healthy uptrend, and that should help support Mexican economic growth in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

Trade Balance 1502

Exports 1502

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