MexECON Blog

April Leading Index Flat at 101.2

In a report on Wednesday, Mexico's index of leading economic indicators was unchanged at a three-year high of 101.2.  According to the report, from the official statistics agency INEGI, the flat performance in April came as three subindexes rose modestly, two subindexes fell, and one subindex was unchanged.  The subindexes posting gains included non-petroleum exports, interest rates, and U.S. equity prices.  Those posting declines included manufacturing employment and Mexican equity prices.  The subindex on the inflation-adjusted exchange rate was unchanged.  The overall leading index is now up 0.7% 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 in the coming months.  When readings are above 100 but flat, as they are now, the index suggests the economy may be passing from an expansionary phase to a period of deceleration.  That probably should be no surprise.  The strong economic growth early in Mexico's economic recovery was not sustainable.  Moreover, the world economy has clearly entered into a potentially long-lasting soft spot, weighed down with problems such as excess housing supplies and high debt loads in many advanced countries and relatively high commodity prices affecting virtually all countries.  These problems suggest Mexico's economy could slow significantly in the near term, though it should keep growing.

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 1104

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