MexECON Blog

Leading Index Revised Downward

Mexico's January index of leading economic indicators came in at 99.9, unchanged from the revised 99.9 in December but below the 100.0 readings in both November and October.  Prior to the revisions, the December figure was a much stronger 100.2, and the November reading was 100.1.  According to the report, the subindex on manufacturing employment edged up to 99.3 in January, compared with 99.2 in December, but the subindex on non-petroleum exports declined to 99.1 from 99.3.  The subindexes on interest rates, the inflation-adjusted exchange rate, Mexican stock prices, and U.S. stock prices were all unchanged in January.

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.  When the index is below 100 and stable, as it was in January, it suggests the economy is decelerating.  Indeed, Mexican economic growth slowed sharply in the fourth quarter of 2013, and in spite of some encouraging signs in the recent data, it appears that activity remains sluggish in early 2014.  Going forward, I expect that the Mexican economy will continue to expand in the coming months, as a recent slowing in exports is partially counterbalanced by modest improvement in domestic demand.  However, the growth rate will probably be uninspiring.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1401

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