Mexican industrial production fell by a seasonally-adjusted 0.3%
in December, just erasing its revised 0.3% gain in November.
According to the report, the decline at the end of the year came
mostly from manufacturing. December factory production fell
1.6%, offsetting its 1.6% rise in November. December mining
output fell 0.8%, marking its fourth straight monthly decrease and
its ninth decline of the year. In contrast, December
construction output rose a healthy 1.1%, and utility production
On an unadjusted basis, overall industrial production in
December was up 3.0% from the same month one year earlier.
Construction output was up 6.8% year-over-year, and manufacturing
output was up 5.7%. Utility production was up 2.3%. In
contrast, mining production in December was down 6.2%
For all of 2014, overall industrial production in Mexico was up
1.9%. Full-year manufacturing output was up 3.7%, while
construction output was up 1.9% and utility production was up
1.8%. Full-year mining production was down 2.3%.
The report was released today by INEGI, the official statistics
Comment: Manufacturing continues
to drive the Mexican industrial sector upward, in spite of its
pullback in December. Manufacturing accounts for the vast
majority of Mexican industrial activity, and it has been benefiting
from both rising exports and improving domestic demand.
Production gains for autos and auto parts, computers
and telecommunications equipment, and metal
products have been particularly strong. Likewise,
construction activity has been on the rise, led first by private
construction but now with some signs that public works may also be
on the upswing. In contrast, the ongoing slide in Mexican
mining output primarily reflects falling petroleum
production. Decades of low investment and mismanagement have
prevented the country from developing new oil and gas fields to
replace those being depleted. The government's recent reform
to allow private-sector investment in energy development is aimed
at reversing that trend. However, with global oil prices in a
deep slide, there is an increased likelihood that private-sector
bidding for new projects will be weaker than anticipated, and some
exploration and development projects will be delayed.
Patrick Fearon, CFA
Vice President, Fund Management