Mexico’s exports were the second largest on record in May, providing additional evidence that the country is benefiting from a reorganization of global supply chains that’s attracting companies closer to the US consumer market.

Total Mexican exports rose 5.8% from a year ago, reaching $52.9 billion, while imports grew 1.4% to $52.9 billion, the country’s statistics institute reported on Tuesday. The value of non-oil shipments to the US increased 11.4% in annual terms, while sales to the rest of the world fell 3.5%.

The country posted a trade deficit of $74 million in May, significantly less than April’s $1.5 billion and the $2.3 billion from a year ago, driven by a growing surplus of non-oil products and a lower deficit in the balance of oil-related products.

Latin America’s second-largest economy continues to benefit from a boost in sales of manufactured goods, which made up 88.6% of all exports so far in 2023. Much of that corresponds to automotive shipments to the US, which jumped 31% in value from a year ago. 

Mexico, particularly its northern states, is a favorite destination for companies that aim to relocate operations from China closer to the US, a process known as nearshoring. In March, Mexico’s exports reached a record $53.6 billion, leading to an unexpected trade surplus.

Yet the positive number, particularly the performance of the automotive sector, may not be sustained considering the risk of a US recession, according to Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.

“If this recovery is confirmed in the data for the next two months, we could begin to talk about a less negative external scenario for the Mexican economy,” Abadia said. “But for now the short-term risks are biased downwards due to a potential recession in the US economy.”