MexECON Blog

Fixed Investment Rebounds Partially

Gross fixed investment in Mexico rose by a seasonally-adjusted 3.0% in January, reversing most of its revised 3.8% decline in December.  According to the report, released today by the official statistics agency INEGI, the rebound in January came mostly from a 3.4% jump in construction.  That was the strongest rise in building activity in at least two years, though it was not sufficient to reverse its big slide in the second half of 2012.  Meanwhile, January investment in new machinery and equipment rose 1.7%, after a 4.8% decline in December and a 4.6% increase in November.  On an unadjusted basis, total fixed investment in January was up 4.6% from the same month one year earlier.

Comment:  Despite the partial rebound in January, the recent weakness in Mexican construction remains worrying.  Construction fell in four of the last five months of 2012, and there is still no indication that activity can rise on a sustained basis in the coming months.  The situation is similar in some other sectors of the Mexican economy.  After softening significantly at the turn of the year, sectors such as international trade, manufacturing, employment, and retail sales have all partially rebounded.  The question now is whether these sectors can continue to strengthen again.  The jury is still out on that issue.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Gross Fixed Investment in Mexico
                                           Seasonally Adjusted, 2003 = 100
                                                         Source:  INEGI
Fixed Investment 1301

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