MexECON Blog

October Fixed Investment Falls

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.3% in October, after a revised 1.0% increase in September and a 1.0% decrease in August.  According to the report, released on Thursday by the official statistics agency INEGI, investment in machinery and equipment rose 0.7% in October, for its fourth straight monthly gain.  However, that was more than offset by a 1.7% decline in construction.  Despite the fall in October, overall investment is still significantly higher than earlier in Mexico's current economic expansion.  On an unadjusted basis, total fixed investment in October was up 9.5% from the same month one year earlier.

Comment:  While there are many positive trends in the Mexican economy, it is becoming increasingly clear that parts of the economy were slowed late last year by weak demand overseas and big risks emanating from Europe and the United States.  Mexican exports have softened since last summer, and industrial activity has turned downward.  Unemployment has been on the rise again, and now fixed investment has flattened out.  As I mentioned at last month's report, Mexican investment took a breather earlier in this expansion phase (in the summer of 2011), only to reaccelerate later.  Now that U.S. politicians have averted part of the "fiscal cliff" of sharp tax hikes and spending cuts at the end of 2012, it is possible that Mexican investment will start growing again.  Nevertheless, slow growth overseas and risks from abroad will probably keep investment lower than it otherwise would be. 

Patrick Fearon, CFA
Vice President, Fund Management

                                         Gross Fixed Investment in Mexico
                                           Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Fixed Investment 1210

0 comment(s) for “October Fixed Investment Falls”

    Leave a Comment