Mexico's January index of leading economic indicators fell to
100.0, after revised readings of 100.1 in December and 100.2 in
both November and October. The reading for January was the
lowest since last May. According to the report, the decline
in January reflected lower readings in three of the six
subindexes. The subindex on U.S. stock prices fell to 100.5,
reaching its lowest level in a year and a half, while the subindex
on Mexican stock prices declined to 99.5, for its lowest level in
more than five years. The subindex on non-petroleum exports
fell to 99.6, marking its fourth straight monthly decline. In
contrast, the January subindexes on manufacturing employment,
interest rates, and the inflation-adjusted exchange rate all posted
The report was released today by INEGI, the official statistics
Comment: Mexico's leading index
is designed so that readings of 100 point to the economy growing at
its long-run tendency in the coming months. When the index is
declining but still above or at 100, as it has been recently, it
suggests the current expansion is losing steam. That is
consistent with the recent cooling in Mexican exports.
Measured in dollars, they have declined in recent months.
However, because of the recent weakness in the value of the peso,
exports as measured in pesos are still rising at a good pace.
In my view, the continued economic expansion north of the border
and the low value of the peso will tend to support a rebound in
Mexican exports going forward, while private investment and
consumer spending will probably continue to trend upward. Low
oil prices and the possibility of higher interest rates in the
United States will probably keep some economic players cautious,
but I suspect the Mexican economy can continue to grow moderately
in the near term.
Patrick Fearon, CFA
Vice President, Fund Management