MexECON Blog

July Industrial Production Rises 0.3 Percent

Mexican industrial production rose by a seasonally-adjusted 0.3% in July, erasing its 0.2% decline in June and matching its 0.3% increase in May.  According to the report, the rise in July came mostly from manufacturing.  Output in that sector jumped 1.2%, reversing its revised 0.9% decrease in the previous month and marking its best gain since January.  Utility output was also up in July, posting a 0.3% increase after a flat performance in June.  In contrast, construction output edged down 0.1%, and mining production dropped 0.3%.

On an unadjusted basis, overall industrial production in July was up 2.1% from the same month one year earlier.  Construction output was up 3.5% year-over-year, and manufacturing output was up 3.4%.  Utility production was up by a marginal 0.7%, and mining output was down 1.7%.

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

Comment:  Mexican industrial production continues to trend upward, in large part because strengthening exports have prompted increased factory activity.  Almost as important, construction is finally rebounding again after a long period of weakness.  The small July pullback in that sector does not seem too alarming, given that the decline was only marginal and came after five straight months of gains.  Public works and the construction trades fell slightly in July, but the erection of buildings continued to rise.  It is important to remember that construction is still relatively weak, and it will take some time for the sector to fully recover.  Nevertheless, the simultaneous rise in exports, manufacturing, and construction will likely give a boost to the Mexican economy, though soft consumer spending will continue to be a headwind in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

Industrial Production 1407

Industrial Production Detail on Construction 1407

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