MexECON Blog

March Fixed Investment Falls 0.6 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.6% during March, matching the revised decrease in February.  That marked Mexico's first back-to-back declines in investment since late 2009.  According to the report, from the official statistics agency INEGI, the decline in March came as investment in new construction fell 1.0%.  Investment in machinery and equipment posted a modest increase.  On an unadjusted basis, total fixed investment in March was up 5.8% from the same month one year earlier.

Comment:  The second straight monthly decline in investment raises a yellow flag for Mexico, especial since other recent indicators have also suggested the country's economic rebound is weakening.  In April, for example, export growth slowed and unemployment rose, while in May, the purchasing managers index for manufacturing declined.  Even more worrisome, the entire world economy is apparently hitting a soft spot, with no clear catalyst for a reacceleration of growth in the near term.  If Mexican exports weaken too much in response to the global slowdown, it would be up to domestic consumption and investment to provide for economic growth.  In recent months, those sectors have started to accelerate, but it is not yet clear if they could pull the entire economy along if exports weaken too much.

Patrick Fearon, CFA
Vice President, Fund Management

                           Gross Fixed Investment in Mexico
                             Seasonally Adjusted, 2003 = 100
                                             Source:  INEGI
Fixed Investment 1103

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