MexECON Blog

January Fixed Investment Falls 0.6 Percent

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.6% in January, after a revised 0.6% decline in December as well.  That marked the first back-to-back declines in investment since a string of six straight decreases from last May to October.  According to the report, the fall in January came in part from a 0.5% decline in machinery and equipment investment.  More important, January construction dropped a sharp 2.6%, after a decline of 0.6% in the previous month.  Residential and non-residential construction both came in lower in January than in December.

On an unadjusted basis, total fixed investment in January was down 2.4% from the same month one year earlier.  Investment in machinery and equipment was down 1.9%, while construction was down 2.7%.

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

Comment:  The declines in January provide additional confirmation that Mexican investment is not yet recovering.  Indeed, it may be moving lower again after a bit of stabilization late last autumn.  The recent softness in Mexican exports may have been one reason for the renewed declines in machinery and equipment investment.  Even more discouraging is the renewed declines in construction.  The sector continues to suffer from a change in the government's housing support policies and reduced public works spending. With investment falling again, there is little reason to expect hiring to pick up, so today's report also suggests Mexican consumer spending will remain weak.  In sum, the data point to continued sluggish economic growth in Mexico for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

                                        Gross Fixed Investment in Mexico
                                          Seasonally Adjusted, 2008 = 100
                                                       Source:  INEGI
Fixed Investment 1401

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