MexECON Blog

May Industrial Output Rises 0.5 Percent

According to INEGI, the national statistics agency, Mexican industrial production rose a seasonally-adjusted 0.5% in May.  In addition, April production was revised upward to show a gain of 0.1% instead of the originally-estimated decline of 0.3%.  The data now show that the country's industrial output has risen for nine straight months.  In unadjusted terms, in fact, production in May was up a robust 8.4% from the same month one year earlier.  The monthly rise in May came mostly from a 1.5% increase in manufacturing output.  That increase was more than enough to offset the revised decline of 0.5% in April.  Mexico's manufacturing output in May was up a hefty 14.2% year-over-year.

Comment:  The good increase in output during May and the revised increase during April are welcome offsets to some other recent data that pointed to a slowdown in the Mexican economic recovery.  The economic rebound continues to be based on inventory rebuilding and somewhat higher corporate and consumer demand in the United States.  Mexican exports have been growing rapidly, leading to increased industrial activity.  Now, there are some signs that domestic investment may also be rising.  One key risk is that U.S. inventory rebuilding could be completed before corporate and consumer demand are growing strongly again.  Another important risk is that the global financial markets could once again become volatile in response to concerns about European debt defaults.  On balance, it still looks like Mexico's economic rebound will continue, though perhaps at a slower pace than in late 2009 and early 2010. 

Patrick Fearon, CFA
Vice President, Fund Management

                                        Mexico's Industrial Production
                                        Seasonally Adjusted, 2003=100
                                                     Source:  INEGI
Industrial Output 1005

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