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
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