MexECON Blog

June Fixed Investment Rises 0.7 Percent

In a report on Monday, gross fixed investment in Mexico rose by a seasonally-adjusted 0.7% during June, after revised increases of 0.7% in May and 1.6% in April.  It was the first time fixed investment in Mexico has risen for three straight months since mid-2010.  According to the report, from the official statistics agency INEGI, the increase in investment in June stemmed entirely from a 2.7% rise in equipment investment.  Purchases and installations of new equipment in Mexico have now risen for four straight months.  In contrast, construction in June was down 0.6%, after increases of 0.7% in May and 0.6% in April.  On an unadjusted basis, total fixed investment during June was up a strong 11.6% from the same month one year earlier.

Comment:  In recent months, indicators of domestic demand in Mexico have generally surprised on the upside.  The third straight rise in fixed investment confirms that Mexico's economic rebound has now spread not only to consumer demand but also to investment activity.  The worsening economic slowdown in the key developed countries is still likely to weigh on Mexican growth in the coming months, but the momentum in domestic demand will probably cushion the blow and help the Mexican economy continue to grow for longer than it otherwise would.

Patrick Fearon, CFA
Vice President, Fund Management

                                      Gross Fixed Investment in Mexico
                                       Seasonally Adjusted, 2003 = 100
                                                      Source:  INEGI
Fixed Investment 1106

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