MexECON Blog

January Leading Index Unchanged at 100.2

Mexico's January index of leading economic indicators came in at 100.2, unchanged from December but higher than the 100.1 in November and the 100.0 readings in each of the three months before that.  The various subindexes were very mixed.  The subindex on manufacturing employment rose to 100.1 in January from 99.8 in December, but the subindex on non-petroleum exports fell to 99.4 from 99.7.  The subindex on Mexican stock prices edged up to 100.2 from 100.1 in the previous month, but the subindex on the inflation-adjusted exchange rate edged down to 99.4 from 99.5.  The subindex on interest rates rose slightly to 100.5.  The subindex on U.S. stock prices rose to 101.0.  The report was released on Wednesday 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.  When the index is rising and above 100, as it is now, it suggests the economy is in an expansionary phase.  Nevertheless, other recent indicators from Mexico have been weak.  Exports and manufacturing have softened, unemployment has risen, and retail sales fell sharply at the end of the year.  Construction and mining have been falling since last summer.  The January leading index offers some reassurance that the Mexican economy will keep growing in the near term, but growth will likely be slower than it has been over the last few years, and there is some risk that the recent weakness could worsen into an outright downturn or prolonged correction.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1301

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