Mexico's August index of leading economic indicators came in at
100.0, unchanged from the revised readings in July and June.
Prior to that, the index had stood at 100.1 for six straight
months. According to the report, the August subindex on
non-petroleum exports edged up to 99.9, while the subindex on
manufacturing employment rose slightly to 98.8. The subindex
on the inflation-adjusted exchange rate rose to 99.4. These
figures were all roughly in line with the readings in recent
months. The subindex on U.S. stock prices rose to a five-year
high of 101.3, but on a less positive note, the subindex on
interest rates was flat at 100.0, and the subindex on Mexican stock
prices fell to a four-year low of 99.4.
The report was released Friday by INEGI, the official statistics
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. The
initial July report showed the index slipping below that level,
raising concerns the Mexico could be slipping into recession.
The August reading and the upward revision to the July figure
are consistent with other recent data that seems to suggest the
economy could avoid a recession. Nevertheless, it is
important to note that Mexico is probably not out of the woods yet.
One major concern is that the government shutdown in the
United States could weigh on demand north of the border and send
Mexican exports and industrial activity downward again.
Patrick Fearon, CFA
Vice President, Fund Management