Mexican industrial production fell by a seasonally-adjusted 0.3%
in March, after revised increases of 0.4% in February and 1.3% in
January. The decline in March stemmed entirely from a sharp
2.2% fall in utility output and a 2.1% drop in mining
production. However, those declines were partially offset by
some encouraging increases in manufacturing and construction.
March manufacuturing production rose 0.2%, posting its
third straight monthly expansion and marking its longest
string of increases since early 2011. March construction
output jumped 0.8%, also posting its third straight monthly rise
and marking its longest string of increases since mid-2011.
On an unadjusted basis, overall industrial production in March was
down 4.9% from the same month one year earlier. The report
was released today by INEGI, the official statistics agency.
Comment: Mexican building
activity was weak throughout the second half of 2012, but the third
straight rise in construction during March shows the sector is now
on the mend. Coupled with the string of increases in
manufacturing output, this indicates the overall Mexican economy
has regained its footing after hitting a soft spot at the turn of
the year. Nevertheless, it is unlikely that the economy will
soon start to expand rapidly again. The economic cycle is too
mature for that. Moreover, problems such as relatively slow
growth in the U.S. economy and the strengthening of the peso
suggest exports will only rise modestly in the near future.
Mexico's economy looks set to keep expanding in the coming months,
but at a moderate pace.
Patrick Fearon, CFA
Vice President, Fund Management