Itaú BBA - MEXICO – Manufacturing exports suggest activity weakness persists in 4Q19

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MEXICO – Manufacturing exports suggest activity weakness persists in 4Q19

Dezembro 27, 2019

Manufacturing exports weakened in November

The trade balance deteriorated at the margin, but still posted a solid result. Monthly trade balance posted a USD 0.8 billion surplus in November, above our forecast of USD 0.2 billion surplus and median market expectations (USD 0.5 billion deficit, as per Bloomberg) – taking the 12-month rolling result to a surplus of USD 4.6 billion (from a surplus of USD 1.5 billion in October). Looking at the breakdown, also using 12-month rolling figures, energy deficit remained broadly unchanged at USD 21.7 billion (compared to October), while non-energy balance improved to a surplus of USD 26.3 billion (from USD 24.0 billion). At the margin, using 3-month annualized seasonally adjusted figures, trade balance deteriorated to USD 5.9 billion surplus in November (from USD 10.5 billion October), with the energy trade deficit remaining broadly unchanged at USD 21.9 billion (from October), while the non-energy surplus decreased to USD 27.7 billion (from USD 32.3 billion).

At the margin, manufacturing exports deteriorated further. Using seasonally adjusted figures, exports fell 13.7% qoq/saar in November (from -6.0% in October), dragged by a deterioration in manufacturing exports (-11.1%, from -3.1%), while oil exports contracted by 37.9% (from -49.3%). 

Non-oil imports deteriorated in November. Total imports fell by 7.5% qoq/saar in November (from -5.6% in October). Looking at the breakdown, non-oil imports deteriorated further (-5.3% qoq/saar in November, from -0.9% in October), dragged by non-oil intermediate imports (-9.3%, from -2.2%), while non-oil consumption goods and capital imports expanded 10.9% (from 6.9%) and 12.1% (from 1.6%), respectively. Still, we note the improvement of capital imports came from depressed levels. 

While the numbers continue to show Mexico’s economy is not facing external imbalances, the behavior of non-oil exports and non-oil imports suggests activity weakness persists in 4Q19. 

Julio Ruiz

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