MexECON Blog

January Leading Index Rises 0.7 Percent

Mexico's index of leading economic indicators (seasonally adjusted) rose to 114.6 in January, up 0.7% from the previous month.  That followed revised increases of 0.4% in December and 1.3% in November.  The index has now risen for eleven straight months, although it has not yet recouped all of its losses since peaking in mid-2008 (see chart below).  According to the report, from the national statistics agency INEGI, the rise in January primarily reflected improvements in Mexico's inflation-adjusted exchange rate, hours worked in the manufacturing sector, crude oil prices, and construction activity.  The only negative influence in January was the subindex on inflation-adjusted stock prices.

Comment:  The long string of increases in the leading index offers additional evidence that the Mexican economy is in a sustained rebound.  That should be no surprise, given that the economy is heavily dependent on demand from the United States.  With the U.S. economy now in recovery, as shown by a surge of inventory rebuilding and a tentative improvement in retail spending, Mexico is likely to keep growing well for a while yet.  If the U.S. economic recovery continues to broaden, the Mexican recovery will likely keep strengthening as well.  These trends should help support more strengthening in the peso and in the value of Mexican assets.

Patrick Fearon, CFA
Vice President, Fund Management

                                   Mexico's Index of Leading Economic Indicators
                                                 Seasonally Adjusted, 2003 = 100
                                                                 Source:  INEGILeading Index 1001

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