MexECON Blog

December Leading Index Rises to 101.3

In a report on Thursday from INEGI, the official statistics agency, Mexico's December index of leading economic indicators rose to 101.3, up from a revised 101.0 in November and 100.8 in October.  The index has now risen for four straight months, and it currently stands at its highest level since February 2008.  According to the report, the rise in the index during December reflected improvements in five out of the six subindexes, including manufacturing employment, non-petroleum exports, Mexican stock prices, U.S. stock prices, and interest rates.  The only negative movement was in the subindex on the inflation-adjusted exchange rate.  The overall leading index is now up 1.3% from the same month one year earlier.

Comment:  This new version of Mexico's leading index is designed so that readings of 100.0 are consistent with the long-run tendency of the economy.  At the current reading of 101.3, the index is pointing toward faster-than-normal growth in the coming months.  Mexican exports are still growing well, and domestic demand is starting to strengthen.  In the medium-to-long term, however, Mexico is unlikely to continue growing at its current fast pace unless it undertakes fundamental economic reforms, such as breaking up monopolies, deregulating the labor market, opening up more industrial sectors to private investment, and otherwise increasing competition.

Patrick Fearon, CFA
Vice President, Fund Management

                             Mexico's Index of Leading Economic Indicators
                                  Based on Seasonally-Adjusted Subindexes
                                               Long-Run Tendency = 100
                                                          Source:  INEGI
Leading Index 1012

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