MexECON Blog

March Leading Index Falls to 99.8

Mexico's March index of leading economic indicators fell slightly to 99.8.  Revised figures showed the index had stood at 99.9 in each of the two prior months, and it had been at 100.0 for seven straight months before that.  According to the report, the slight change in March reflected the fact that all of the subindexes were virtually flat during the month, with readings ranging from 99.1 for the subindex on manufacturing employment to 101.1 for the subindex on U.S. stock prices.

The report was released on Tuesday 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 falling, as it was in March, it suggests the economy may be heading toward recession.  The Mexican economy has indeed been sluggish recently.  Nevertheless, exports are a bit stronger than they were a few months ago, and there seems to be a modest improvement in hiring and consumer sentiment.  That could counterbalance some of the challenges facing Mexico, such as the continued standstill in construction.  In spite of the small decrease in the leading indicators during March, I therefore continue to believe that the most likely scenario going forward is for the economy to keep growing, though at an uninspiring rate.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1403

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