MexECON Blog

May Industrial Production Rises 0.1 Percent

Mexican industrial production edged up by a seasonally-adjusted 0.1% in May, after revised increases of 0.5% in April and 0.2% in March.  Production has now risen for five straight months.  According to the report, the small rise in May came entirely from the manufacturing sector.  Manufacturing output was up 0.4%, after a 1.2% increase in April.  On a less positive note, May construction output edged down 0.1%, after three straight months of modest increases.  Output in the construction trades rose modestly, but building activity and public works construction declined.  Mining output fell 0.2% in May, for its third straight decrease, and utility production slumped 1.2%.

On an unadjusted basis, overall industrial production in May was up 1.6% from the same month one year earlier.  Manufacturing output was up 3.6% year-over-year, and utility output was up 1.0%.  In contrast, mining production was down 0.2% year-over-year, and construction output was down 1.0%.

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

Comment:  In spite of the deceleration in May, it is clear that Mexican industrial activity remains on the upswing.  Indeed, the five straight increases through May marked the longest string of gains in almost two years.  This good performance can be traced primarily to the recent acceleration in Mexican exports, which has boosted factory production.  The latest data suggest U.S. demand is continuing to strengthen, so I suspect that Mexican exports and manufacturing will keep trending upward in the coming months.  In spite of the small dip in construction during May, I also suspect that sector has bottomed out and may be starting to rebound.  Nevertheless, construction remains relatively weak.  A shift in government housing policy has left many of the country's homebuilders in dire financial straits, while tight fiscal policy is keeping a lid on public works spending.  Any rebound in construction is likely to be drawn out, so the sector will probably continue to weigh on overall industrial production and economic growth for a while yet.   

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1405

Industrial Production Detail on Construction 1405

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