Mexico's May index of leading economic indicators fell to 100.3,
after revised readings of 100.5 in each of the previous three
months. That marked the first decline in the index since last
summer. The decrease came mostly from a fourth straight
monthly fall in the subindex on manufacturing employment.
That subindex dipped to 99.9 in May, reaching its lowest level
since late 2009. The subindexes on Mexican stock prices, U.S.
stock prices, interest rates, and the inflation-adjusted exchange
rate were all unchanged at close to the 100 level. In
contrast, the subindex on non-petroleum exports rose for a sixth
straight month, reaching 101.0. The report was released on
Thursday 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 but falling, as it is now, it points to
slowing growth. The softening in the leading index is
consistent with the worsening of the European debt crisis and the
slowdown in U.S. economic growth over the last few months. If
those trends continue, Mexico's economic prospects are bound to
worsen. For now, however, Mexico's reaccelerating export
growth and good momentum in domestic demand should keep the economy
Patrick Fearon, CFA
Vice President, Fund Management