MexECON Blog

December Industrial Production Falls 0.3 Percent

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 rose 1.7%.

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% year-over-year.

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 agency.

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

Industrial Production 1412

Industrial Production Detail by Industry 1412

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