MexECON Blog

June Fixed Investment Rises 0.3 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.3% in June, erasing part of the 2.4% plunge in May.  According to the report, released today by the official statistics agency INEGI, investment in machinery and equipment fell 1.6% in June, after a 4.1% decline in May.  However, the fall in machinery and equipment investment was more than offset by a strong rise in construction.  The report showed construction jumped 1.6% in June, easily erasing the modest declines in each of the previous two months.  On an unadjusted basis, total fixed investment in June was up 2.7% from the same month one year earlier.

Comment:  The small rise in Mexican fixed investment during June helps confirm that the country staged a modest rebound after the latest global financial scare out of Europe in the spring and evidence of slowing U.S. economic growth at the same time.  Other recent reports show Mexican manufacturing activity continued to grow during the summer, and unemployment declined.  Nevertheless, more recent data has suggested the problems from abroad may be starting to catch up with Mexico.  While manufacturing has continued to grow, the latest purchasing managers' report shows the rate of growth is slowing.  Mexico's index of leading economic indicators has also been gradually declining, and consumer confidence fell steeply in August.  The signs of slowing growth are still modest in Mexico, and it still seems that any slowdown could be limited.  However, the risk of significant contagion from abroad remains high.

Patrick Fearon, CFA
Vice President, Fund Management

                                        Gross Fixed Investment in Mexico
                                           Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Fixed Investment 1206

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