MexECON Blog

April Leading Index Rises to 100.7

Mexico's April index of leading economic indicators rose to 100.7, after a revised 100.6 in March.  The index has now risen for six straight months, and it stands at its highest level in almost one year.  The small rise in April stemmed from increases in just two of the six subindexes.  The subindex on Mexico's non-petroleum exports rose to 101.0, marking its fourth straight monthly increase and reaching its best reading since August 2008.  Meanwhile, the subindex on U.S. stock prices rose for a sixth straight month to 101.1.  The subindexes on Mexican stock prices, manufacturing employment, and interest rates were all flat in April.  The subindex on the inflation-adjusted exchange rate fell slightly.  The report was released today 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 above 100 and rising, as it is now, it points to accelerating growth.  Nevertheless, it is important to note that the index's rate of increase has slowed in the last couple of months, and even though strong exports and consumer spending have given the Mexican economy significant momentum, the very recent deterioration in the global economy could prompt a slowdown.  The near-term prospects for the Mexican economy are still unusually positive, but if the European debt crisis worsens dramatically or U.S. economic growth slows sharply, Mexican growth could stall out or even go into reverse.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1204

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