MexECON Blog

November Fixed Investment Rises 1.8 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 1.8% in November, for its first increase since last April.  Revised figures show investment fell in each of the previous six months.  According to the report, the rise in November investment stemmed entirely from a big jump in construction, which had not posted an increase since last May.  Investment in machinery and equipment was down slightly.

On an unadjusted basis, total fixed investment in November was down 4.5% from the same month one year earlier.  Machinery and equipment investment was down 2.9% year-over-year, while construction was down 5.4%.

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

Comment:  Mexico's monthly report on industrial production is always more timely than the report on fixed investment, and the production report last month had already indicated the November rebound in construction.  As I mentioned last month, there seems a good chance that the rise in construction is only a short-term blip.  I have seen no other evidence that Mexican homebuilding and public works projects might be turning around.  What's new in today's report is the drop in November machinery and equipment investment.  It's true that the drop reversed only a part of the good gain in that category in September and October, and it's true that one month of decrease does not necessarily establish a trend.  Nevertheless, the drop is not what one would expect if the economy was really preparing for a period of more robust growth, as some analysts are forecasting.  As I have mentioned many times before, weak domestic demand will probably limit the Mexican economy's growth rate in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

                                      Gross Fixed Investment in Mexico
                                        Seasonally Adjusted, 2008 = 100
                                                      Source:  INEGI
Fixed Investment 1311

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