MexECON Blog

July Industrial Production Rises 0.5 Percent

Mexican industrial production rose by a seasonally-adjusted 0.5% in July, and output in June was revised upward to show a 1.5% increase.  The rise in July came as manufacturing output expanded 0.5% and construction grew 0.8%.  Both those categories had posted increases of 1.7% in the previous month.  Also contributing to the rise in July's output was the utility sector, where production increased a strong 1.5%, after two straight months of slight declines.  Mining production edged up 0.1% in July, matching its increase in June.  On an unadjusted basis, overall industrial production in July was up 4.9% from the same month one year earlier.  The report was released today by INEGI, the official statistics agency.

Comment:  Even though Mexico's output growth was slower in July than in June, the second straight monthly increase shows that the economy quickly recovered from last spring's flare up of the European debt crisis and signs of slowing growth in the United States.  The modest but quick rebound speaks to the new-found competitiveness of the Mexican economy and the good momentum in its domestic demand.  Those factors will tend to keep the Mexican economy growing at a good pace for a while yet, though slowing economic growth around the globe will probably start to mute Mexican activity in the near future.  The main risk to Mexico comes from abroad.  If the European debt crisis intensifies seriously again, it would likely undermine global confidence and cause a significant drop in Mexican exports and overall economic activity.

Patrick Fearon, CFA
Vice President, Fund Management

                                             Mexican Industrial Production
                                             Seasonally Adjusted, 2003 = 100
                                                        Source:  INEGI
Industrial Output 1207

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