Mexico's February industrial production rose by a
seasonally-adjusted 0.3%, after a revised increase of 0.6% in
January and a revised decline of 0.4% in December. According
to the report, the rise in February came in part from a 1.2% jump
in construction output. That increase was barely enough to
erase the sector's 1.1% fall during January, but it did mark the
sector's third expansion in the last four months. Mining
production rose 0.5% in February, after a 0.1% gain in the previous
month. Output in the key manufacturing sector inched ahead by
just 0.2% in February, after a jump of 2.8% in the first month of
the year. In contrast, February utility output fell 0.6%, for
its second straight monthly decline.
On an unadjusted basis, overall industrial production in
February was up a modest 0.7% from the same month one year
earlier. Manufacturing production was up 2.3% year-over-year,
and output was up 0.2% in both the mining and utility
sectors. However, construction output was down 2.4%.
The report was released today by INEGI, the official statistics
Comment: Although the second
straight monthly rise in manufacturing production during February
is encouraging, the slowdown in the rate of increase is a yellow
flag. The deceleration may reflect the recent softness in
Mexican exports and continuing problems in domestic demand.
One key domestic problem has been construction, and even the
February surge in that sector was less than meets the eye.
Details in the report show that the rise in construction output
came mostly from increased activity in the construction
trades. In contrast, the erection of new buildings and public
works projects remained in the doldrums. On balance, the data
still point to only muted growth in the industrial sector and the
Mexican economy in general.
Patrick Fearon, CFA
Vice President, Fund Management