MexECON Blog

November Industrial Output Rises 0.2 Percent

In a report from INEGI, the official statistics agency, Mexico's November industrial production rose a seasonally-adjusted 0.2%, after a revised decline of 0.4% in October and a flat performance in September.  Construction output jumped 1.2% in November, after a decline of 0.2% in October.  Utility output rose 0.7%, after three straight months of declines, and manufacturing output rose 0.5%, after falling for two straight months.  The only major category to post a decrease in November was mining, where production fell 0.1%.  That decline was driven by a third straight fall in petroleum and natural gas output.  Overall industrial production in Mexico has now risen in 12 of the last 15 months.  In unadjusted terms, output in November was up 5.3% from the same month one year earlier.

Comment:  Mexican industrial activity continues to expand, though at a somewhat slower pace than at the beginning of the country's economic rebound.  The main impetus continues to be rising exports, primarily to the United States.  In addition, domestic consumption has recently been rising again.  The main disappointment in today's report is the continuing decline in petroleum and natural gas production.  Because Mexican law generally prohibits private firms from participating in the energy sector, and because the Mexican government has channeled too little of its oil revenue back into investment in the petroleum and natural gas fields, Mexican energy output has been sliding for the last several years.  A recent reform is expected to increase the amount of private-sector activity in the industry, but most observers believe the impact will be modest.  Rising exports from Mexico's manufacturing sector will likely continue, but falling energy output will eventually slow export growth, weigh on industrial activity, and crimp government finances.

Patrick Fearon, CFA
Vice President, Fund Management

                                 Mexican Industrial Production
                                Seasonally Adjusted, 2003 = 100
                                              Source:  INEGI
Industrial Output 1011

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