MexECON Blog

Leading Index Steadies in August

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 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.  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

Leading Index 1308

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 last Friday 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.  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, but 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

 

 

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