MexECON Blog

September Industrial Production Drops 1.2 Percent

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 statistics agency.

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

Industrial Production 1309

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