MexECON Blog

September Leading Index Falls to 100.0

Mexico's September index of leading economic indicators fell to 100.0, after readings of 100.1 in August and 100.2 in July.  Prior to that, the index was at 100.3 in June and 100.4 in both May and April.  According to the report, the subindex on non-petroleum exports fell to 99.9 in September, compared with 100.2 in August.  The subindex on the inflation-adjusted exchange rate eased to 99.6 from 99.8, and the subindex on manufacturing employment edged down to 99.1 from 99.3.  Some subindexes were more stable.  The subindex on Mexican stock prices was unchanged at 100.0, and the subindex on interest rates was unchanged at 100.4.  The only subindex to rise in September was the one on U.S. stock prices.  That subindex rose to 101.1, its highest level since June 2008.  The report was released yesterday by INEGI, the official statistics agency.

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 the index is falling but remains at or near 100, as it is now, it points to moderating growth.  Slightly weaker economic growth in Mexico might not be such a bad thing it if helps reverse the recent acceleration in inflation.  The risk, however, is that more moderate growth would leave the economy more vulnerable to external risks, such as a renewed deterioration in the European debt crisis or a rapid fiscal tightening in the United States.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1209

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