MexECON Blog

July Leading Index Rises Again

Mexico's July index of leading economic indicators rose to 100.3, compared with revised readings of 100.1 in June, 100.0 in May, and 99.9 in both April and March.  The reading for July was the highest in more than two years.  According to the report, the rise in July stemmed entirely from increases in two of the six subindexes.  The subindex on non-petroleum exports rose for a third straight month, reaching a 12-month high of 100.0, while the subindex on Mexican stock prices rose to a 10-month high of 99.8.  The subindex on U.S. stock prices was unchanged at 101.0, while the subindex on the inflation-adjusted exchange rate was unchanged at 99.8.  The subindex on manufacturing employment was flat at 99.5.  The only subindex to post a decline in July was the one on interest rates.  That subindex fell to 99.6, its lowest level in more than three years.

The report was released on Friday 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 above 100 and rising, as it is now, it suggests the economy is expanding and gathering strength.  That probably reflects the recent reacceleration in Mexican exports and a budding rebound in the country's construction sector.  However, a soft labor market and rising prices are still weighing on consumer spending.  That will probably limit how much Mexican economic growth can accelerate in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

Leading Index 1407

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