MexECON Blog

March Industrial Production Falls 0.3 Percent

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

Industrial Output 1303

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