MexECON Blog

March Industrial Output Falls 0.2 Percent

Mexico's March industrial production fell a seasonally-adjusted 0.2%, after a decline of 0.4% in February.  That marked the first back-to-back decreases in this indicator since at least 2008.  According to the report, from the official statistics agency INEGI, the decline in March stemmed in large part from manufacturing output, which fell 0.4%.  In addition, construction activity was down 1.0%.  In contrast, output was up 0.7% in both mining and utilities.  On an unadjusted basis, overall output in March was up a moderate 4.2% from the same month one year earlier, after year-over-year gains of 5.0% in February and 6.5% in January.

Comment:  Recent reports out of Mexico have been mixed.  For example, the index of leading indicators is still pointing to above-average growth and international trade has been exceptionally strong, but a report earlier this week also showed a decline in fixed investment in March and falling consumer confidence in April.  Against this backdrop, the two straight months of decline in industrial output bear watching.  In fact, output has declined for two straight months in both the key subsectors of manufacturing and construction, so added vigilance is even more warranted.  The data may show that Mexican firms are starting to see moderating orders in the face of the strong peso, rising commodity costs, and the maturing of the economic cycle.  The reports serve as a reminder that while the Mexican economic rebound is likely to continue, growth is likely to moderate in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

                             Mexican Industrial Production
                           Seasonally Adjusted, 2003 = 100
                                           Source:  INEGI
Industrial Output 1103

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