MexECON Blog

September Fixed Investment Rebounds

Gross fixed investment in Mexico jumped in September, rising by a seasonally-adjusted 1.1% and erasing the revised 1.0% decline in August.  The increase in September was the third in the last four months, after gains of 0.9% in July and 0.5% in June.  According to the report, from the official statistics agency INEGI, investment in machinery and equipment edged down by 0.1% in September, just offsetting a 0.1% increase in the prior month.  For construction, however, the story was the opposite.  September construction jumped 2.0%, erasing its 1.9% slide in August and marking the strongest increase since March.  On an unadjusted basis, total fixed investment in September was up 3.1% from the same month one year earlier.

Comment:  Mexican investment activity is continuing to trend upward, but the growth rate is cooling.  Slow economic growth around the world and caution in the face of risks from Europe and the United States are clearly weighing on plans for new plant and equipment in Mexico.  At the same time, it is important to remember that investment took a breather earlier in this expansion phase (in the summer of 2011), only to reaccelerate later.  If U.S. politicians are able to avert the "fiscal cliff" of sharp tax hikes and spending cuts currently programmed for year's end, optimism about the North American economy would probably rebound and Mexican investment would probably reaccelerate again.  If the fiscal cliff is not averted, or if the European debt crisis flares up again, investment could flatten out or even go into reverse. 

Patrick Fearon, CFA
Vice President, Fund Management

                                       Gross Fixed Investment in Mexico
                                          Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Fixed Investment 1209

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