Exports and China...

"China exports more than $4 of goods to the United States for each $1 it imports from America, creating a trade surplus of about $275 billion.", according to an article in the January 31, 2011 New York Times.

To put the the size of China's trade surplus in perspective, that surplus is nearly the size of Mexico's total exports ($298 billion) in 2010. China's trade surplus exceeded the $257 billion Mexico earned from its manufactured exports.

Rising costs in China have already caused a slowdown in American orders, which has translated into "some container shipping lines to cancel up to a quarter of their trips to the United States this spring from Hong Kong and other Chinese ports... the annual pre-[Chinese] New Year rush has been nothing like that of recent years, causing shipping lines to reverse rate increases and cancel sailings they introduced last summer as the American economy improved."

This is an opportunity for Mexico as well as other Asian manufacturers.

http://www.nytimes.com/2011/01/31/business/global/31trade.html?pagewanted=2&nl=todaysheadlines&emc=tha25

The job story...

The Administration proudly announced that the number of workers registered with the Social Security Institute (IMSS) rose by 720,348 in 2010. That is its highest year-end level since 2003 and the greatest number of jobs created in a calendar year since 1999. The accomplishment is, indeed, one of which to be proud.

The unemployment data published by INEGI last Friday is on the "half empty" side of the famous glass. By any measure -- national, urban, seasonally adjusted or not -- the December 2010 unemployment rate was higher than than in December 2009. The seasonally adjusted urban unemployment rate, my preferred measure, stood at 6.73% last month, 49 basis points higher than in December 2009 and 40 basis points higher than in December 2008.

The two measures of unemployment (the IMSS and the INEGI numbers) can be compatible, if one assumes that the IMSS enforcement efforts have persuaded employers to register employees who should have been registered but weren't.

An excellent column

by Luis Rubio was published in Reforma, the Mexico City daily, yesterday, Sunday, January 23. You can find it on the editorial page.

For history buffs...

An fascinating article on Mexico's Matias Romero's meeting on January 18, 1861 in Springfield, Illinois with President-elect Abraham Lincoln...

http://opinionator.blogs.nytimes.com/2011/01/17/lincolns-mexican-visitor/?ref=opinion&nl=opinion&emc=tya5

Useful to remember that the Juarez Liberals who won Mexico's civil war thought the road to modernization was through integration with the country's northern neighbor.

Good news for Mexican growth, exports and employment...

On January 10, CNN Money argued that the December auto sales figures in the US could portend a good 2011:

"Most automakers ended a challenging 2010 with a strong sales month, raising hopes that the industry could be carrying some momentum into the new year.

American automakers General Motors, Ford Motor and Chrysler Group all posted solid gains that met or topped forecasts. Ford's gains in 2010 allowed it to recapture the position of No. 2 automaker in U.S. sales, trailing only GM, for the first time since 2006, reclaiming the spot from Toyota Motor."

Given that a quarter of all Mexican manufactured exports are auto-related (four-fifths of which go to the US market), growing vehicle sales in the US is very positive for Mexico.

ECONOMEX BLOGS

If you're interested in reading the Economex blog from previous years, you can find it at the following addresses:

http://economex2010.blogspot.com/

http://economex2009.blogspot.com/

http://economex2008.blogspot.com/

http://economex2007.blogspot.com/

OUT WITH THE OLD YEAR AND IN WITH THE NEW

The financial markets saw 2010 go out on and rang in 2011 on a positive note. Mexican equities once again outperformed the three major US indices. The IPC climbed 27.0%, measured in dollars, in 2010. The Nasdaq, the strongest of the three US indices, gained 16.9%. The Dow rose 11.0% last year while the S&P 500 appreciated 12.8%.

Mexican equities have dramatically outperformed US stocks this decade. Between the final day of 1999 and the last day of 2010, the Bolsa index soared 315.9% in dollars. The Dow did the best of the US indices: it inched up 0.7%. The S&P 500 and Nasdaq lagged considerably, losing 9.4% and 34.8%, respectively.

The IPC’s spectacular gains over the last eleven years may be reason to suppose that it is due for a period of underperformance. The dominant market position of many of the firms that comprise the IPC are reason to think otherwise.

Unless the Europeans fail to preserve the Euro or the Mexican government abandons its decades’ long commitment to macro stability, investors in Mexico should prosper.