MexECON Blog

January Industrial Output Jumps 1.4 Percent

Mexico's January industrial production jumped a seasonally-adjusted 1.4%, its strongest increase since October 2009.  The big expansion in January followed revised increases of 0.9% in December and 0.7% in November.  According to the report, from the national statistics agency INEGI, the increase in overall output during January came mostly from a 1.5% rise in manufacturing output and a 1.6% rise in construction activity.  Utility output in January was up a more modest 1.2%, while mining output was down 0.9%.  Overall industrial production in Mexico has now risen in ten of the last twelve months.  On an unadjusted basis, overall output in January was up 6.6% from the same month one year earlier.

Comment:  The Mexican industrial sector continues to power forward, driven by increased demand for manufactured products both abroad and at home.  The export markets remain key, and as long as last week's earthquake in Japan does not put too much of a damper on U.S. economic growth, Mexican sales north of the border should continue growing well.  Another important risk is that the strong peso could weigh on exports.  Finally, high levels of violence by Mexico's drug cartels still have the potential to weigh on domestic investment activity.  In spite of these risks, however, the near-term outlook for Mexico's industrial sector remains bright.

Patrick Fearon, CFA
Vice President, Fund Management

                             Mexican Industrial Production
                            Seasonally Adjusted, 2003 = 100
                                           Source:  INEGI
Industrial Output 1101

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