MexECON Blog

August Fixed Investment Rises 0.4 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.4% during August, after revised increases of 0.5% in July and 0.3% in June.  Mexican fixed investment has now risen for five straight months.  According to the report, the rise in August came entirely from a 0.6% increase in construction.  The subcategory of residential construction was up a strong 1.6%, for its seventh straight monthly gain.  In contrast, machinery and equipment investment fell 0.4%.

On an unadjusted basis, total fixed investment in August was up 4.3% from the same month one year earlier.  August construction was up 3.3% year-over-year, while machinery and equipment investment was up 5.8%.

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

Comment:  The remarkable string of seven straight months of increased homebuilding provides proof positive that the subsector is now in a well-established recovery.  The government is looking to ramp up spending on infrastructure projects, so the rest of the construction sector may also turn up soon.  Indeed, the more timely report on industrial production, due out on Tuesday, will show whether the sector kept growing in September.  If so, it bodes well for employment, manufacturing, and overall economic growth, especially since the economy is already getting a boost from stronger exports.

Patrick Fearon, CFA
Vice President, Fund Management

                                       Gross Fixed Investment in Mexico
                                         Seasonally Adjusted, 2008 = 100
                                                        Source:  INEGI
Fixed Investment 1408

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