MexECON Blog

May Industrial Production Rises 1.4 Percent

Mexico's May industrial production rose by a seasonally-adjusted 1.4%.  That marked the strongest gain in six months, but it was still not enough to offset the revised decreases of 1.8% in April and 0.4% in March.  According to the report, May construction output jumped 2.5%, after a sharp 3.8% decrease in April.  Production in the key manufacturing sector rose 1.0%, just reversing its 0.9% decline in the previous month.  Mining output rose a modest 0.8% in May, after two months of big decreases, and utility production edged up 0.3%.

On an unadjusted basis, overall industrial production in May was up just 0.5% from the same month one year earlier.

The report was released today by INEGI, the official statistics agency.

Comment:  Unfortunately, the rise in industrial production during May is not convincing.  It still appears that Mexican industrial activity is on a downtrend, and the overall economy's tentative reacceleration during the spring seems to have petered out.  Activity could well strengthen again later in the year if U.S. demand rebounds, the peso remains at current levels, and domestic spending starts to grow again.  However, a sustained reacceleration is not guaranteed.  Mexican economic growth is likely to remain muted in the near term, and downside risks are higher than they were just a couple of months ago.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1305

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