MexECON Blog

September Fixed Investment Rises 0.2 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.2% in September, partly reversing its 0.4% decline in August.  Prior to that, investment had jumped 1.3% in July.  The partial rebound in September came as construction activity surged 2.9%, its biggest monthly increase since at least 2008.  The rise in construction was more than sufficient to offset a sharp 3.7% fall in new machinery and equipment investment.  On an unadjusted basis, total fixed investment in September was up 6.8% from the same month one year earlier.  The report was released by INEGI, the official statistics agency.

Comment:  Yesterday's report on October industrial production suggests much of September's construction gain was reversed the following month.  The more interesting point in today's report may be that machinery and equipment investment has now fallen for three straight months, and its decline in September was the sharpest since June 2010.  That probably reflects the late summer's global financial panic and slowing economic growth abroad.  More recently, incoming data has suggested there is unexpected momentum in the U.S., Canadian, and Mexican economies.  That could put a floor under Mexican investment in the coming months.  As I have been arguing recently, Mexico's economic risks are still weighted to the downside because of economic challenges abroad, but the momentum in North America could produce an upside surprise.

Patrick Fearon, CFA
Vice President, Fund Management

                                        Gross Fixed Investment in Mexico
                                          Seasonally Adjusted, 2003 = 100
                                                        Source:  INEGI
Fixed Investment 1109

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