MexECON Blog

June Fixed Investment Rises 0.2 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.2% during June, after revised gains of 0.7% in May and 1.0% in April.  That marked the first time Mexican fixed investment has risen for three straight months since the beginning of 2013.  According to the report, the rise in June stemmed entirely from a gain in construction investment.  Construction increased 1.5% in June, erasing its 0.4% decline during May and marking the category's fourth rise in the last five months.  In contrast, June investment in machinery and equipment fell 3.8%, after increases of 2.0% in May and 2.6% in April.

On an unadjusted basis, total fixed investment in June was up 2.2% from the same month one year earlier.  Investment in new construction was up 1.3%, for its first year-over-year increase since November 2012.  Investment in machinery and equipment was up 3.7% year-over-year.

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

Comment:  The June pullback in machinery and equipment investment is not too alarming.  Investment in machinery and equipment can be volatile, and it is notable that the decline in that category during June was not enough to offset the healthy increases in the previous two months.  The more important news in this report, and in other recent data, is that construction continues to rebound after a long period of extreme weakness.  Details in today's report show that residential building rose for a fifth straight month in June.  Other details show that non-residential construction posted a strong 3.1% increase, offsetting its 2.2% slide in the previous month.  The more timely report on industrial production, due out tomorrow, will show whether construction continued to rebound in July.  Coupled with the recent acceleration in Mexican exports, a continued rebound in construction would help support faster economic growth overall, though soft consumer spending remains a headwind.

Patrick Fearon, CFA
Vice President, Fund Management

                                        Gross Fixed Investment in Mexico
                                          Seasonally Adjusted, 2008 = 100
                                                       Source:  INEGI
Fixed Investment 1406

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