MexECON Blog

August Leading Index Rises Further

Mexico's August index of leading economic indicators rose to 100.4, after revised readings of 100.2 in July and 100.1 in June.  The index has now risen for five straight months, reaching its highest level since early 2012.  According to the report, the rise in August came as three of the six subindexes rose to their highest levels in more than a year.  The subindex on manufacturing employment jumped to 99.9 from 99.6 in July, while the subindex on the inflation-adjusted exchange rate edged up to 99.9 from 99.8.  The subindex on Mexican stock prices rose slightly to 100.0.  Meanwhile, the subindex on non-petroleum exports was unchanged at 99.9, and the subindex on U.S. stock prices was unchanged at 100.9.  On the negative side, the August subindex on interest rates fell to 99.5, its lowest level in almost four years.

The report was released on Monday 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 rising, as it is now, it suggests the economy is expanding and gathering strength.  That almost surely reflects the recent reacceleration in Mexican exports and a budding recovery in the country's construction sector.  Nevertheless, a relatively soft labor market and rising prices are still weighing on consumer demand, and that will probably limit how much Mexican economic growth can accelerate in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1408

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