MexECON Blog

February Industrial Production Rises 0.5 Percent

Mexican industrial production rose by a seasonally-adjusted 0.5% in February, after a revised 1.3% gain in January.  Output has now risen almost back to its level prior to the big 1.9% drop in the final month of last year.  The rise in February came mostly from a jump in manufacturing.  Production from Mexican factories rose 0.7% in February, driven in large part by a solid increase in auto and auto parts production and a good gain in machinery and industrial equipment output.   February construction output was up 0.3%, and mining output was up 0.2%.  Utility output retreated by a slight 0.1%.  On an unadjusted basis, Mexico's overall industrial production in February was down 1.2% from the same month one year earlier.  The report was released today by INEGI, the official statistics agency.

Comment:  Incoming reports confirm that Mexico is at least partially rebounding after hitting an economic soft spot at the turn of the year.  The rise in construction during February was especially important, as it marked a second straight monthly gain in the sector.  The last time Mexican construction had risen for two straight months was last summer.  Despite these good signs, however, it is important to remember that the Mexican economy is unlikely to accelerate back to the extraordinarily strong growth rates of the last few years.  The economic cycle is now much more mature, which alone would argue for more moderate growth.  While important sectors such as international trade and industry have partially recovered from their year-end pullback, they are now growing much more slowly than before.  The economy is also vulnerable to important risks, such as slow growth in the United States and other developed countries, the possibility of another flare up in the European debt crisis, and strong capital flows into Mexico that are driving up the peso.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Output 1302

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