MexECON Blog

January Leading Index Rises to 101.3

Mexico's January index of leading economic indicators rose to 101.3, up from revised readings of 101.1 in December and 100.9 in November.  In fact, it was the fifth straight monthly rise, bringing the index to its highest level since February 2008.  According to the report, from the official statistics agency INEGI, the rise in January reflected increases in four of the six subindexes, including U.S. stock prices, Mexican stock prices, non-petroleum exports, and manufacturing employment.  The subindex on Mexican interest rates was unchanged, while the subindex on the inflation-adjusted exchange rate fell.  The overall index is now up 1.1% from the same month one year earlier.

Comment:  Mexico's leading index is designed so that readings of 100 are consistent with the economy growing at its long-run tendency.  At the current reading of 101.3, the index is pointing to above-average growth in the coming months.  The Mexican economy is benefiting from both strong foreign demand and improving domestic demand, and those factors are likely to keep the economy humming in the near term.  Looking forward, however, the economy is unlikely to keep growing strongly unless the government pushes through important 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 1101

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