MexECON Blog

September Leading Index Comes in Flat

Mexico's September index of leading economic indicators came in at 100.90, unchanged from the revised reading in August.  The index remains slightly below what appears to be its cycle peak of 101.03 in May.  According to the report, from the national statistics agency INEGI, the subindex on manufacturing employment fell in September, but that decline was offset by small increases in the subindexes on nonpetroleum exports, U.S. stock prices, and inflation-adjusted prices for Mexican stocks, exchange rates, and interest rates.

Comment:  Although Mexico is using a new version of its leading index that has not yet been tested over a long period, the flattening in the index over the last few months is consistent with the recent behavior of the economy.  The Mexican economy still appears to be growing well, and while it is not accelerating, there are some signs that it is on the verge of moderating.  If U.S. demand softens as many observers expect, Mexican exports are likely to slow as well.  In addition, Mexican consumers are ramping up their spending only modestly, while Mexican investment is still on ice.  On balance, the Mexican economy is still likely to grow at a decent pace in 2011, but growth is likely to be weaker than in 2010.

Patrick Fearon, CFA
Vice President, Fund Management

                             Mexico's Index of Leading Economic Indicators
                                    Based on Seasonlly-Adjusted Subindexes
                                               Long-Run Tendency = 100
                                                         Source:  INEGI
Leading Index 1009

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