MexECON Blog

February Industrial Production Drops 1.7 Percent

Mexico's February industrial production dropped by a seasonally-adjusted 1.7%, after revised increases of 1.3% in January and 0.8% in December.  It was the first decline in Mexican industrial activity since last autumn.  Construction output slumped 2.7% in February, easily erasing the 1.2% rise in January and marking the sharpest monthly decline since at least 2009.  Manufacturing output fell 1.4%, following gains of 1.3% in January and 1.2% in December.  Utility output also fell 1.4% in February, for its biggest decline since January 2011.  Mining output jumped 3.4%, but that was not enough to offset the declines in the other categories.  On an unadjusted basis, overall industrial production in February was up 5.9% from the same month one year earlier.  The report was released on Wednesday by INEGI, the official statistics agency.

Comment:  A report earlier in the week said construction and other investment activity in Mexico continued to surge in January, but the report on industrial production suggests there was quite a give-back in February.  Because some recent U.S. data has softened again, part of the problem may be that U.S. demand has reversed, at least temporarily.  Nevertheless, overall foreign and domestic demand probably has enough momentum to keep Mexican industrial activity on an upward trend for a while longer, even if the rate of growth moderates.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexican Industrial Production
                                       Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Industrial Output 1202

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