MexECON Blog

May Fixed Investment Falls 0.2 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.2% in May, marking the third straight monthly decline.  Revised figures showed drops of 1.4% in April and 1.3% in March.  The small decline in May came as investment in machinery and equipment fell 1.6%, erasing its 0.8% increase in the previous month.  On a more positive note, construction activity rose 1.7% in May, erasing part of its 3.9% decrease in the previous month.

On an unadjusted basis, total fixed investment in May was down 0.7% from the same month one year earlier.

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

Comment: Mexican investment in machinery and equipment fell in two of the three months ended in May, and the June industrial production report released on Friday showed construction fell in two of the three months ended in June.  The figures show just how significantly the Mexican economy is slowing.  Soft exports, cooling industrial production, stalled hiring, and faltering domestic demand are all having an impact.  There is still some hope that the economy will stabilize and perhaps reaccelerate toward the end of the year, especially if the U.S. economy picks up as expected.  However, any improvement is likely to be modest, and growth is likely to be muted at best.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Gross Fixed Investment in Mexico
                                            Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGIFixed Investment 1305 

 

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.2% in May, marking the third straight monthly decline.  Revised figures showed drops of 1.4% in April and 1.3% in March.  The small decline in May came as investment in machinery and equipment fell 1.6%, erasing its 0.8% increase in the previous month.  On a more positive note, construction activity rose 1.7% in May, erasing part of its 3.9% decrease in the previous month.
On an unadjusted basis, total fixed investment in May was down 0.7% from the same month one year earlier.
The report was released on Wednesday by INEGI, the official statistics agency.
Comment:  Mexican investment in machinery and equipment fell in two of the three months ended in May, and the June industrial production report released on Friday showed construction fell in two of the three months ended in June.  The figures show just how significantly the Mexican economy is slowing.  Soft exports, cooling industrial production, stalled hiring, and faltering domestic demand are all having an impact.  There is still some hope that the economy will stabilize and perhaps reaccelerate toward the end of the year, especially if the U.S. economy picks up as expected.  However, any improvement is likely to be modest, and growth is likely to be muted at best.
Patrick Fearon, CFA
Vice President, Fund Management

 

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