MexECON Blog

October Fixed Investment Falls 0.3 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.3% in October, after a similar decline of 0.3% in September.  Mexican fixed investment has now fallen for six straight months, and it has declined in nine of the last twelve months.  According to the report, investment in machinery and equipment actually jumped 1.7% in October, following a small 0.1% increase in September.  However, investment in new construction slumped 0.5%, for its seventh straight monthly decline.

On an unadjusted basis, total fixed investment in October was down 5.6% from the same month one year earlier.  Machinery and equipment investment was down 2.6% year-over-year, but construction was down 7.4%.

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

Comment:  Mexico's monthly report on industrial production is always more timely than the report on fixed investment, and the production report released last week showed construction rebounded sharply in November (the production report does not include data on machinery and equipment investment).  Nevertheless, the November rebound may well prove short-lived.  I have seen no evidence of anything that would sustainably reverse the downtrend in housing construction and public works projects that was evident through October.  Weak construction is likely to continue weighing on Mexican fixed investment and general economic activity for the time being. 

Patrick Fearon, CFA
Vice President, Fund Management

                                          Gross Fixed Investment in Mexico
                                            Seasonally Adjusted, 2008 = 100
                                                          Source:  INEGI
Fixed Investment 1310

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