MexECON Blog

November Fixed Investment Falls 0.4 Percent

In a report today from the official statistics agency INEGI, gross fixed investment in Mexico fell by a seasonally-adjusted 0.4% during November, following revised increases of 0.2% in October and 1.2% in September.  The decline in November was the first since June 2010.  According to the report, the decrease stemmed primarily from a modest decline in machinery and equipment investment.  Investment in new construction rose for a fifth straight month.  On an unadjusted basis, total fixed investment in November was up 7.8% from the same month one year earlier, for its strongest year-over-year gain since mid-2008.

Comment:  Despite the modest pullback in November, fixed investment in Mexico still appears to be on the upswing.  Fixed investment has now grown in 10 of the last 13 months, and the five straight increases in construction investment may be a harbinger of continued increases in the future.  Mexican exports continue to grow at a good pace, in spite of the strong peso.  In addition, recent unemployment figures have been encouraging, and the January consumer confidence report showed Mexicans now view their economic situation more favorably and are more willing to buy durable goods.  If foreign demand for Mexican goods continues to grow as expected, and if domestic demand continues to strengthen, investment activity is likely to keep growing as well.

Patrick Fearon, CFA
Vice President, Fund Management

                                   Gross Fixed Investment in Mexico
                                    Seasonally Adjusted, 2003 = 100
                                                   Source:  INEGI
Fixed Investment 1011

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