MexECON Blog

September Industrial Production Falls 0.1 Percent

Mexican industrial production fell by a seasonally-adjusted 0.1% during September, after revised increases of 0.2% in each of the previous two months.  Utility production actually expanded 0.5%, for its third straight monthly increase, and production in the key manufacturing sector rose 0.3%, offsetting much of its 0.5% decline in the previous month.  However, September construction output edged down 0.1%.  More problematic, mining production dropped 0.7%, erasing its modest rise in August and marking its seventh decline in the last ten months.  The fall in mining output came as oil and natural gas production continued to decline.

On an unadjusted basis, overall industrial production in September was up 3.0% from the same month one year earlier.  Construction output was up 5.1% year-over-year, and manufacturing output was up 4.8%.  Utility output was up a more moderate 2.5% year-over-year, but mining output was down 2.7%.

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

Comment:  Mexico's overall industrial production remains on an uptrend, in spite of the small decline in September.  Rebounding exports have boosted factory production, while a recovery in homebuilding has put construction on the upswing again.  Those trends seem set to remain in place for the time being.  Now that the government is loosening fiscal policy, stronger public works spending could boost the construction sector even further.  The fly in the ointment is the mining sector, where decades of low investment and poor management have prevented the country from developing new oil and gas fields to replace those that are being depleted.  The government's recent reform to allow private-sector investment in the energy sector is aimed at reversing those problems, but the reform will not have a significant impact for some time yet.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1409

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