Mexico Trade August 2017

Mexico

Mexico: Manufacturing exports regain some strength in August

September 27, 2017

The external sector appears to have regained some traction in August. The trade report shows exports expanded 10.3% year-on-year in August, reaching a total of USD 35.8 billion. The figure was above the 8.0% increase recorded in the previous month and reflected stronger overseas sales of Mexican manufactured products, which account for about 90% of total exports. Manufacturing exports were up 10.7% in annual terms in August, notably above the 7.2% increase recorded in the previous month. The improvement was in line with strong PMIs, manufacturing, employment and automotive production readings in August.

Imports soared 12.2% in August over the previous year, accelerating from a 6.6% year-on-year expansion in July and pushing the value of Mexico’s imports to USD 38.5 billion. The improved performance in imports likely reflected resilient dynamics in the domestic economy. Non-oil durable goods growth decelerated slightly to a still-strong 7.7% increase (July: +7.9% year-on-year), backing up the narrative that private consumption will ease in H2 but will remain supportive of growth. Capital imports growth also regained all of its strength after nearly stagnating in July, while non-oil intermediate goods also regained some footing in August. The latter points to robust momentum ahead in the manufacturing sector, given intermediate goods’ strong correlation with the manufacturing cycle.

The 12-month trailing trade deficit widened to USD 9.5 billion—above July’s two-year low of a USD 8.7 billion shortfall. Notwithstanding this month’s headline figure, the strong performances of both exports and imports highlight the dynamism of overall trade in Mexico. However, the recovery of the peso and a tight labor market risk are eroding Mexico’s competitiveness, which could weigh on its external sector.

Panelists surveyed for this month’s LatinFocus report expect exports to reach USD 400 billion in 2017, which would represent a 7.0% expansion compared to the previous year. Meanwhile, imports are expected to grow 5.9% and reach USD 410 billion. For 2018, the panel expects both exports and imports to expand 4.8%.


Author:, Economist

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Mexico Trade12m August 2017

Note: 12-month sum of trade balance in USD billion and annual variation of the 12-month sum of exports and imports in %.
Source: Mexico National Statistics Institute (INEGI)


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