MexECON Blog

Industrial Production Stalls in June

Mexican industrial production was unchanged in June, after adjusting for normal seasonal variations.  That followed a revised 1.1% increase in May and a revised 1.7% decrease in April.  According to the report, June manufacturing output was up 0.5%, following a 0.9% gain in the previous month.  However, utility output was down 0.2%, and mining output was down 0.4%.  Even worse, June construction was down 1.6%, almost erasing its gain in May.

On an unadjusted basis, overall industrial production in June was down 2.4% from the same month one year earlier.

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

Comment:  Mexico's second straight rise in manufacturing output during June is encouraging, but the good news is counterbalanced by the renewed weakness in mining and construction.  That serves to underscore that the current slowdown in the Mexican economy comes not only from softer exports and concern about tighter U.S. fiscal policy, but also from weakening domestic activity.  In particular, the government has changed housing support policies and tightened its spending, putting a damper on building construction and civil works projects.  Mexican industrial production could strengthen again later in the year if U.S. demand rebounds as expected, but the problems in domestic demand could keep growth muted in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1306

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