MexECON Blog

June Industrial Production Falls 0.6 Percent

Mexico's June industrial production fell by a seasonally-adjusted 0.6%, erasing more than half the revised 1.0% gain in May and marking its first decline since March.  According to the report, from the official statistics agency INEGI, the decline in June came mostly from a 0.7% fall in manufacturing output.  That was the first decline in factory activity since two modest decreases in March and February.  In contrast, construction and mining were essentially flat, while utility production rose 0.4%.  On an unadjusted basis, overall output in June was up a modest 3.7% from the same month one year earlier.

Comment:  Industrial production can be volatile, so the decline in Mexican output during June is not necessarily alarming.  However, it is notable that the all-important manufacturing sector had its sharpest decline in activity in a year and a half.  That is consistent with the global economic slowdown that took hold in late spring and early summer.  On balance, the incoming data still suggests Mexico has enough momentum to weather the slowdown for a while, but exports, industrial activity, and domestic demand are all likely to soften eventually.  The Mexican economy is still likely to keep growing in the near term, but risks are weighted to the downside.

Patrick Fearon, CFA
Vice President, Fund Management

                                Mexican Industrial Production
                               Seasonally Adjusted, 2003 = 100
                                              Source:  INEGI
Industrial Output 1106

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