MexECON Blog

June Fixed Investment Falls 1.1 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 1.1% in June, after a revised May drop of 1.0%.  June investment in machinery and equipment actually inched up 0.1%, but construction slumped 1.7%.

On an unadjusted basis, total fixed investment in June was down 3.1% from the same month one year earlier.  Machinery and equipment investment was up 4.8% year-over-year, but construction was down 7.2%.

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

Comment: Starting this month, the base data for the fixed investment report has shifted to 2008, so the revisions versus last month are significant.  However, the basic story is unchanged.  Mexican businesses continue to install new machinery and equipment, but construction has fallen steeply.  One problem is that government spending has been disrupted ever since the inauguration of Mexico's new president last December.  That has brought public works projects to a standstill.  In addition, a change in government housing policy has sharply reduced residential construction.  The government could probably reverse these problems relatively quickly, but there is no sign of that happening as yet.  Fixed investment looks set to remain a serious drag on the Mexican economy for at least a while yet.

Patrick Fearon, CFA
Vice President, Fund Management

Gross Fixed Investment in Mexico
Seasonally Adjusted, 2008 = 100
Source:  INEGI

Fixed Investment 1306

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