Mexico Reports Surprise April Trade Surplus on Manufacturing

Mexico reported its third trade surplus in a row in April, the longest streak in almost two years, as manufacturing exports surged, signaling the economy is recovering from a poor start to the year.

The surplus totaled $510 million last month, the national statistics agency said on its website today, more than estimated by any of the nine economists surveyed by Bloomberg, whose median projection was for a $433 million deficit. Foreign sales of manufactured goods, which accounted for 83 percent of exports last month, increased 7.1 percent from a year earlier, the most since September. Automotive exports rose 12 percent.

“The strong export rebound is behind this surprise, and this is positive for growth in the coming months,” Marco Oviedo, the chief Mexico economist at Barclays Plc, said in an e-mailed response to questions.

Today’s report supports predictions from the government and central bank that Latin America’s second-largest economy will improve in the second quarter, Oviedo said. Both institutions cut their 2014 growth forecasts last week after a slower-than-estimated recovery in the first three months of the year. President Enrique Pena Nieto has ended Mexico’s state oil monopoly and pushed through other industry overhauls to spur growth after the economy expanded less than analysts forecast in four of the past five quarters.

Export Rebound

The peso erased an earlier loss and was little changed at 12.8596 per U.S. dollar at 10:05 a.m. in Mexico City.

The increase in manufacturing exports was partly offset by a 21 percent drop in crude oil exports, the most since June 2012. Finance Minister Luis Videgaray said in an interview with Radio Formula on May 23 that low oil production is hindering the economy and that the overhaul pushed by Pena Nieto, which is in the process of being implemented, may help reverse a decline in output from state-owned Petroleos Mexicanos.

Total exports increased 3.7 percent in April from a year earlier, gaining for a third month after a contraction in January, when the economy in the U.S., the buyer of about 80 percent of Mexico’s exports, stalled amid harsh winter weather. The U.S. Federal Reserve said at its April meeting that economic activity has picked up since the winter slump at the start of the year.

Today’s report “suggests that external demand is recuperating,” Delia Paredes, an economist at Grupo Financiero Banorte SAB, said in an e-mailed research report.

Mexico’s light vehicle exports rose 9 percent to 202,328 in April as shipments advanced 19 percent to the U.S. and 67 percent to Canada, the Mexican Automobile Industry Association, an automakers trade group, said on May 7. Exports by General Motors Co. more than doubled last month while Honda Motor Co. and Mazda Motor Corp. began shipping cars from Mexican plants that opened earlier this year.


Overhaul: Revisión
Recovering: Recuperar
Buyer: Comprador
Hindering: Dificutar
Automaker: Ensamblador de carros

http://www.bloomberg.com/news/2014-05-26/mexico-had-surprise-april-trade-surplus-on-manufacturing-growth.html