MexECON Blog

April Industrial Output Falls 0.3 Percent

Mexico's industrial production fell 0.3% in April, after seasonal adjustments, according to a report this week from the national statistics agency.  However, the decline in April was only the second in the last eight months, and it reversed only a small part of the 0.9% increases in each of the previous two months.  In unadjusted terms, Mexican industrial output during April was up a healthy 6.1% from the same month one year earlier.  According to the report, the monthly decline in April reflected a 0.8% decrease in manufacturing output, although that reversed only part of this volatile sector's 1.4% rise in March.  Also in April, mining output fell 0.4%, following a 0.1% decline in the previous month.  Finally, construction fell 0.3% in April, after an increase of 1.0% in March.  These declines were partially offset by utility output, which is generally more stable.  Mexico's utility output rose 0.7% in April and 0.6% in March.

Comment:  Because of inventory rebuilding and a modest increase in corporate and consumer demand in the United States, Mexican exports have been rising strongly, and that has led to sharply higher output in the country's industrial sector.  Manufacturing has especially benefitted.  In fact, Mexico's factory output in April was up a strong 11.2% year-over-year.  While there are risks, such as the recent volatility in the global financial markets and an on-going credit crunch at home, the continued recovery in the United States is likely to keep pulling along Mexican industry.

Patrick Fearon, CFA
Vice President, Fund Management

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