MexECON Blog

September Fixed Investment Falls 0.6 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.6% in September, after a revised 1.9% decline in August.  Mexican fixed investment has now fallen for five straight months, and it has declined in eight of the last ten months.  According to the report, September investment in machinery and equipment fell 0.2%, after a plunge of 4.4% in August and a rise of 0.6% in July.  Investment in new construction fell in September by 1.6%, after declines of 0.6% in both August and July and a fall of 0.9% in June.

On an unadjusted basis, total fixed investment in September was down 5.5% from the same month one year earlier.  Machinery and equipment investment was unchanged year-over-year, but construction investment was down 8.4%.

The report was released on Friday by INEGI, the official statistics agency.

Comment: Not only did this report show a continuing slide in construction and overall investment, but the revisions referred to above served to erase the mid-summer increases in both categories that had been reported previously.  The data underscore that the construction sector in particular remains a significant headwind for the Mexican economy.  The October industrial production report due out next week will provide a more up-to-date read on construction activity, but I suspect it will continue to show extreme weakness in public works construction (the result of reduced government spending) and frozen housing construction (the result of new housing support policies over the last year).

Patrick Fearon, CFA
Vice President, Fund Management

Gross Fixed Investment in Mexico
Seasonally Adjusted, 2008 = 100
Source:  INEGI
Fixed Investment 1309

 

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.6% in September, after a revised 1.9% decline in August.  Mexican fixed investment has now fallen for five straight months, and it has declined in eight of the last ten months.  According to the report, September investment in machinery and equipment fell 0.2%, after a plunge of 4.4% in August and a rise of 0.6% in July.  Investment in new construction fell in September by 1.6%, after declines of 0.6% in both August and July and a fall of 0.9% in June.
On an unadjusted basis, total fixed investment in September was down 5.5% from the same month one year earlier.  Machinery and equipment investment was unchanged year-over-year, but construction investment was down 8.4%.
The report was released on Friday by INEGI, the official statistics agency.
Comment:  Not only did this report show a continuing slide in construction and overall investment, but the revisions referred to above served to erase the mid-summer increases in both categories that had been reported previously.  The data underscore that the construction sector in particular remains a significant headwind for the Mexican economy.  The October industrial production report due out next week will provide a more up-to-date read on construction activity, but I suspect it will continue to show extreme weakness in public works construction (the result of reduced government spending) and frozen housing construction (the result of new housing support policies over the last year).
Patrick Fearon, CFA
Vice President, Fund Management
Gross Fixed Investment in Mexico
Seasonally Adjusted, 2008 = 100
Source:  INEGI

 

 

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