MexECON Blog

June Exports in Partial Rebound

Mexico's June merchandise trade deficit narrowed to a seasonally-adjusted $1.354 billion, after a revised deficit of $1.779 billion in May.  According to the report, Mexican exports jumped 3.6% to $31.976 billion during June, erasing much of their 5.1% decline in May and posting their best monthly gain since last October.  The partial rebound in June came mostly from a big jump in foreign sales of non-auto manufactured goods.  Imports also rose in June, expanding 2.1% to $33.330 billion.  On an unadjusted basis, Mexican exports in June were up 1.2% from the same month one year earlier, while imports were up 4.7%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in June, they were up a healthy 6.5% year-over-year.  The major manufactured exports showing the biggest increases were professional and scientific equipment, autos and auto parts, and industrial equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 41.0% year-over-year in June.  Within this category, the volume of crude oil exports averaged 1.048 million barrels per day, down 2.5% from June 2014.  The average export price for Mexican crude was just $55.92 per barrel, down 43.4%.  Finally, Mexican agriculture exports in June were up 10.7% year-over-year.  Among the agriculture exports posting the best performances, cattle exports were up 83.1%, and onion exports were up 48.1%.  Among the agriculture exports posting the worst performances, citrus exports were down 19.0%, and fish and shellfish exports were down 31.8%.

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

Comment:  Even though petroleum products account for only about one-seventh of Mexico's total merchandise exports, sliding crude oil production and slumping global prices have weighed heavily on the country's trade balance.  During the first half of 2015, the value of Mexican petroleum exports was down $10.2 billion from the first half of 2014, easily offsetting the $6.1-billion increase in the value of all non-petroleum exports.  Even the rise in non-petroleum exports is not as rosy as it could be, since it appears that U.S. manufacturers' demand for foreign inputs has softened as they deal with problems such as the strong dollar, weak economic growth in Europe and Asia, and falling investment in the energy industry.  I am optimistic that Mexico's non-petroleum exports can continue to rise, especially now that European economic growth seems to be accelerating again and U.S. consumers continue to boost their spending.  However, Mexico's falling oil output and continued weak prices seem certain to weigh on overall exports, helping keep the trade deficit elevated.

Patrick Fearon, CFA
Portfolio Manager

Trade Balance 1506

Exports 1506

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