Mexican industrial production fell by a seasonally-adjusted 1.2%
during September, erasing not only its revised 0.6% rise in August,
but also its small increases in each of the three months before
that. The drop in September was so steep that it brought
output back down to its lowest level in two years. The
decline in September stemmed in large part from a sharp 1.5%
decrease in construction activity. Construction in Mexico has
now fallen for four straight months, and it has been down in six of
the last nine months. Manufacturing output also fell sharply
in September, by 1.1%, but that was its first fall in five months,
and manufacturing activity in Mexico remains close to a record
high. Utility output fell a modest 0.7% in September, while
mining production rose 0.2%.
On an unadjusted basis, overall industrial production in
September was down 1.6% from the same month one year earlier.
Manufacturing output was up 1.2% year-over-year, and utility
production was up 1.0%. However, mining output was down 1.2%,
and construction was down a whopping 8.3%.
The report was released on Monday by INEGI, the official
Comment: Mexico's Finance
Ministry recently released figures suggesting the economy returned
to growth in the third quarter, after contracting in the second
quarter. The average level of industrial activity in the
third quarter was indeed above the average level in the second
quarter, even with the big decline in September, so it would only
take some decent numbers for agriculture and services for the
economy to show positive growth when the official, detailed report
on the third quarter is released next week. Nevertheless, the
continued slide in construction and the September retreat in
manufacturing serve as a reminder that the Mexican economy
continues to face headwinds.
Patrick Fearon, CFA
Vice President, Fund Management