MexECON Blog

June Leading Index Unchanged at 100.2

Mexico's June index of leading economic indicators came in at 100.2, just as it did in May and April.  Revised figures show the index had stood at 100.1 for the three months prior to that.  According to the report, the subindex on U.S. stock prices continued to rise in June, reaching a multi-year high of 101.4.  The subindex on Mexican manufacturing employment rose slightly to 99.4.  Less encouraging, the subindex on non-petroleum exports was flat at 99.8, while the subindex on the inflation-adjusted exchange rate was unchanged at 99.2.  The subindex on interest rates was steady at 100.1.  The subindex on Mexican stock prices declined modestly to 99.6.

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

Comment:  Mexico's leading index is designed so that readings of 100 are consistent with the economy growing at its long-run tendency in the coming months.  When the index is above 100 and stable, as it is now, it suggests the economy is topping out.  In spite of the recent gains in the U.S. stock market, economic growth north of the border remains slow.  That has put a lid on Mexican exports and manufacturing, even as changing regulations and an uncertain environment have discouraged construction and other forms of investment.  Hiring has slowed, consumer optimism has softened, and retail demand is in retreat.  Mexican activity could strengthen again later in the year if U.S. growth accelerates as expected and the recent pullback in the peso starts to have an impact.  For now, however, the outlook for Mexico remains uninspiring.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1306

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