MexECON Blog

January Industrial Production Rises 0.5 Percent

Mexican industrial production rose in January by a seasonally-adjusted 0.5%, essentially reversing its 0.5% decline in December.  According to the report, the rise in January stemmed entirely from a strong 2.3% rebound in manufacturing production.  That increase was the sector's biggest since mid-2012, though it was still not enough to offset the declines of 1.7% in December and 0.8% in January.  Meanwhile, January mining output fell 0.1%, for its second straight monthly decline, and utility output dropped 0.9%.  Most discouraging of all, Mexican construction output fell 1.2% in January, after being unchanged in December and up 2.4% in November.  Prior to that, construction output had fallen for five straight months.  The drop in construction during January reflected a sharp pullback in public works projects.

On an unadjusted basis, overall industrial production in January was up 0.7% from the same month one year earlier.  Manufacturing output was up 2.5% year-over-year, and utility production was up 0.3%.  However, mining output was down 0.1% year-over-year.  Construction output fared even worse, with a decline of 2.5% year-over-year.

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

Comment:  I found the January production report disappointing.  In spite of the rebound in factory output during January, for example, manufacturing production remains below the levels seen last summer and autumn.  Recent reports suggest Mexican exports have been softening, even as imports may be starting to rise again, and that could again push manufacturing downward in the coming months.  Likewise, while today's report showed that the construction of new buildings has stabilized and that activity in the construction trades has turned upward, the steep fall in public works construction during January may be a sign that government spending is still tightening.  In sum, it appears that Mexico's industrial sector will continue to face a number of international and domestic challenges for a while yet.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1401

Industrial Production Detail on Construction 1401

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