MexECON Blog

January Fixed Investment Rises 1.6 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 1.6% in January, and revised figures show investment climbed 2.0% in both December and November.  That marked the best three-month stretch of investment activity since at least 2009.  The increase in January came in part from construction activity, which jumped 1.7%, after rising just 0.2% in December and 0.3% in November.  Investment in machinery and equipment rose 1.4%, after gains of more than 4.0% in each of the previous two months.  On an unadjusted basis, total fixed investment in January was up 8.7% from the same month one year earlier.  The report was released on Tuesday by INEGI, the official statistics agency.

Comment:  A range of data suggests economic activity in both the United States and Mexico reaccelerated in late 2011 and early 2012, so it is no surprise to see the good performance in Mexican investment during January.  With the most recent U.S. data softening a bit, the question is whether Mexico will at some point see a mere moderation of activity or a more dramatic slowdown.  As I've mentioned on this blog before, the relatively good prospects for the U.S. economy and the increased competitiveness of Mexican manufacturers suggest Mexico's economy will continue to perform well.  Nevertheless, the Mexican economy (and Mexican investment) could potentially be derailed if the European debt crisis worsens again, rising prices undermine Mexican consumption spending, or the peso strengthens too much.

Patrick Fearon, CFA
Vice President, Fund Management

                                     Gross Fixed Investment in Mexico
                                      Seasonally Adjusted, 2003 = 100
                                                      Source:  INEGI
Fixed Investment 1201

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