MexECON Blog

November Fixed Investment Rises

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.8% in November, erasing a revised decline of 0.2% in October.  According to the report, released on Friday by the official statistics agency INEGI, the rise in November stemmed entirely from increased investment in new machinery and equipment.  Spending on that category jumped 3.8%, after increases of 1.2% in October and 0.3% in each of the two months before that.  In contrast, new construction decreased 1.0% in November, after falling 2.0% in October.  On an unadjusted basis, total fixed investment in November was up 5.4% from the same month one year earlier.

Comment:  The November acceleration in machinery and equipment investment is consistent with other recent reports pointing to rebounding exports and strong manufacturing activity at the end of 2012.  Now that U.S. politicians have found a workaround for the "fiscal cliff" of sharp tax hikes and spending cuts that had been scheduled for January 1, it appears demand north of the border will keep growing in the near term.  That is likely to prompt further investment gains.  It is also likely to prompt renewed investment in construciton.  Nevertheless, the modest pace of growth overseas and risks from abroad will probably keep total investment lower than it otherwise would be.

Patrick Fearon, CFA
Vice President, Fund Management

                                              Gross Fixed Investment in Mexico
                                                Seasonally Adjusted, 2003 = 100
                                                              Source:  INEGI
Fixed Investment 1211

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