MexECON Blog

September Industrial Output Falls 0.1 Percent

In a report released Thursday, Mexico's September industrial production fell by a seasonally-adjusted 0.1%.  However, that erased only a small portion of the revised 0.4% gains in each of the previous two months.  According to the report, from the official statistics agency INEGI, the decline in September came as manufacturing production decreased 0.7% and mining output fell 0.3%.  The only industrial sector to post an increase in September was construction, where activity rose 1.5%.  Despite the decline in September, overall industrial production in Mexico has risen in 10 of the last 13 months, and output in September was up 6.3% from the same month one year earlier.

Comment:  Rising exports continue to boost Mexican industrial activity, but the gains are starting to slow.  After all, demand from north of the border is starting to weaken as the effects of fiscal stimulus start to wane, U.S. inventory rebuilding cools off, and U.S. consumers continue to husband their resources and pay down debt.  The main bright spot in today's report was that Mexican construction activity rose for a third straight month - a feat last seen in early 2008.  It is too early to say the increase in construction during late summer is a sign that fixed investment is on the rise again, especially after a report this week said fixed investment in buildings decreased in August.  Nevertheless, the recent activity could be a sign that investment has at least stabilized and is ready to start rising consistently in the near future.  If consumer spending accelerates further and investment does start rising again, the Mexican economic recovery would be in a better position to weather the expected softening in exports.

Patrick Fearon, CFA
Vice President, Fund Management

                                Mexican Industrial Production
                              Seasonally Adjusted, 2003 = 100
                                            Source:  INEGI
Industrial Output 1009

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