MexECON Blog

Exports Rise Further, But So Do Imports

Mexico's April merchandise trade deficit widened to a seasonally-adjusted $1.224 billion, after revised deficits of $589.8 million in March and $124.8 million in February.  According to the report, exports as measured in dollars rose 1.4% to $32.482 billion in April, after a 0.2% increase in March.  The increase in April reflected gains across a broad range of manufactured exports, which offset decreases in foreign sales of petroleum, mineral products, and agricultural goods.  However, April imports also increased, jumping 3.3% to $33.706 billion, after a revised rise of 1.7% in the previous month.  On an unadjusted basis, Mexican exports in April were down 3.3% from the same month one year earlier, while imports were down 1.6%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in April, they were up 3.2% year-over-year.  The major manufactured products showing the biggest increases were autos and auto parts; metal products for home use; and electronics and electrical goods.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 50.5% year-over-year in April.  Within this category, the volume of crude oil exports averaged 1.035 million barrels per day, down 1.5% from April 2014.  The average export price for Mexican crude was $49.99 per barrel, down 47.8%.  Finally, Mexican agriculture exports in April were down a slight 0.1% year-over-year.  Among the agriculture exports posting the worst performances, chickpea exports were down 52.0%, fresh strawberry exports were down 29.6%, and melon exports were down 26.8%.  Among the agriculture exports posting the best performances, cattle exports were up 42.5%, and mango exports were up 39.3%.

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

Comment:  The rebound in Mexican exports is welcome evidence that the North American economy may be strengthening again after a weak spot at the turn of the year.  It is also notable that the rebound in Mexican imports over the last couple of months has come mostly from greater purchases of foreign intermediate inputs and capital goods, which can be a harbinger of stronger Mexican manufacturing in the coming months.  The continued weakness in the peso should help keep exports growing while eventually discouraging imports.  If Mexican exports and manufacturing activity continue to improve, and if domestic construction and consumer demand keep strengthening, it would help ensure that the Mexican economy will continue to grow at least moderately in the near term.

Patrick Fearon, CFA
Portfolio Manager

Trade Balance 1504

Exports 1504

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