MexECON Blog

October Industrial Production Rises 0.3 Percent

Mexican industrial production rose by a seasonally-adjusted 0.3% during October, after a revised flat performance in September and increases of 0.2% in each of the two months before that.  According to the report, the rise in October came mostly from manufacturing, as output from Mexican factories rose a healthy 0.7%, following a 0.2% gain in the previous month.  In addition, production rose 0.2% in both the construction and the utility industries.  In contrast, October mining production slumped 1.4%, marking its eighth decline in the last eleven months and its worst drop since December 2012.

On an unadjusted basis, overall industrial production in October was up 2.1% from the same month one year earlier.  Construction output was up 5.4% year-over-year, and manufacturing output was up 3.9%.  Utility production was up 2.3% year-over-year, but mining output was down 5.0%.

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

Comment:  Mexican industrial production remains on an uptrend, though the rate of increase has slowed a bit in recent months.  The rise in the industrial sector has come mostly from strengthening exports, which have boosted factory production, and an ongoing rebound in residential and commercial construction.  Public works construction has also risen for the last five months, though the increase has been tepid.  The main weak spot has been in mining, where decades of low investment and mismanagement 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 investment in energy development is aimed at reversing those problems.  This week, the government took an important step forward by granting preliminary approval to the auction process for an initial block of production-sharing deals.  Nevertheless, the process will take some time to have a significant impact on production.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1410

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