MexECON Blog

September Leading Index Posts Small Gain

Mexico's September index of leading economic indicators rose to 100.3, after revised figures showed the index at 100.2 in each of the previous two months.  Even though the rise in September was modest, the index has been gradually trending upward since the spring, and it is now at its highest level since May 2012.  According to the report, the rise in September came from increases in just two of the six subindexes.  The subindex on manufacturing employment rose to 99.9, marking its fourth straight monthly increase and reaching its highest level in a year and a half.  The subindex on Mexican stock prices edged up to 100.0, marking its fifth straight gain and reaching its highest level in more than one year.  In contrast, the subindexes on non-petroleum exports and the inflation-adjusted exchange rate were both unchanged at 99.8.  The subindex on U.S. stock prices fell slightly to 100.7, while the subindex on interest rates eased to 99.5.

The report was released on Thursday 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 is understandable, given that Mexican exports have been accelerating, the long-suffering construction sector is in recovery, and recent data point to stronger hiring, improved consumer confidence, and higher consumption demand.  The economy could still be thrown back if rising U.S. interest rates spark a sudden outflow of capital, or if hiring fails to improve much further.  For now, however, the economy seems to be in a clear acceleration phase.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1409

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