MexECON Blog

December Leading Index Steady at 100.2

Mexico's December index of leading economic indicators came in at 100.2, unchanged from the revised reading in November.  In fact, the index has now stood at its current level for four straight months.  According to the report, from the official statistics agency INEGI, the subindexes on manufacturing employment, inflation-adjusted exchange rates, and U.S. stock prices all posted modest increases in December.  The subindexes on non-petroleum exports, Mexican stock prices, and interest rates were all unchanged.  The overall index is now down 0.6% 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 the index is above 100 but falling, as it generally has been since mid-2011, it suggests economic growth will moderate.  The report for December was much more positive than last month's report.  The original estimate for November put the index slightly below the 100 mark, suggesting an impending recession.  With the revisions to the previous months' estimates, it now looks like the economy might just skirt a pullback.  This is consistent with other recent data, which show a firming job market and rebounding consumer demand in the United States, as well as strong consumer spending and renewed investment growth in Mexico itself.  The main risks are that the European debt crisis could worsen again and Asian economic growth could slow too much.  If those risks do not materialize, however, the near-term prospects for North America look positive, and Mexico's economy will probably continue to grow at a modest pace.

Patrick Fearon, CFA
Vice President, Fund Management 

Leading Index 1112

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