MexECON Blog

September Industrial Production Rises 1.8 Percent

Mexican industrial production jumped a seasonally-adjusted 1.8% in September, easily erasing its revised 1.3% decline in August and marking its best increase since July 2009.  According to the report, from the official statistics agency INEGI, the rebound in September reflected a 2.5% jump in construction and a 1.5% rise in manufacturing output.  Both those increases were the strongest since March 2010.  September utility output fell 0.2%, while mining output declined 1.2%.  On an unadjusted basis, overall production in September was up 3.6% from the same month one year earlier.

Comment:  Today's report on September industrial production is a welcome antidote to yesterday's report showing a decline in construction and other fixed investment in August.  Taken together, the reports suggest the global financial panic in late summer may have had only a fleeting impact on Mexico's domestic economy.  Domestic demand in Mexico has significant momentum, as has been argued often on this blog.  It appears to have weathered the late-summer challenges impressively.  Nevertheless, weaker demand abroad has started to impact the trade sector.  Mexican export growth has slowed.  If foreign demand weakens further, industrial production and other domestic sectors in Mexico will likely start to slow as well.  In spite of today's good report, Mexico's economic risks remain weighted to the downside.

Patrick Fearon, CFA
Vice President, Fund Management

                                       Mexican Industrial Production
                                     Seasonally Adjusted, 2003 = 100
                                                    Source:  INEGI
Industrial Output 1109

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