Gross fixed investment in Mexico fell by a seasonally-adjusted
0.5% in March, but that erased only a small part of the revised
1.7% gain in February. The decline in March stemmed entirely
from a 1.2% pullback in machinery and equipment investment, which
followed a 2.8% increase in the category during the previous
month. On a more positive note, investment in new
construction increased 0.3% in March, after rising 0.7% in February
and 4.0% in January.
On an unadjusted basis, total fixed investment in March was down
5.5% from the same month one year earlier.
The report was released on Thursday by Mexico's official
statistics agency, known as INEGI.
Comment: Despite the small pullback in
March, it appears Mexican fixed investment is on an uptrend again
after stumbling at the turn of the year. That is consistent
with other recent reports that suggest important sectors such as
exports are also in a tentative recovery. And even though the
data show that investment in March was down sharply year-over-year,
the decline would have been much smaller if investment hadn't
posted an unusual surge in March 2012. The most positive
aspect of the report was the third straight month of increased
construction activity. Mexican construction had been very
weak throughout the second half of 2012, in large part because
homebuilding has been nearly frozen by a change in government
support programs, while public works spending was disrupted by the
inauguration of Mexico's new president at the end of 2012.
Now, it appears construction could be on a sustained uptrend
again. If next Tuesday's report on April industrial
production shows that construction has continued to strengthen, it
would help confirm that the Mexican economy really is regaining its
footing again after the soft spot at the turn of the year.
Patrick Fearon, CFA
Vice President, Fund Management
Fixed Investment in Mexico
Adjusted, 2003 = 100