MexECON Blog

February Industrial Production Rises 0.2 Percent

Mexican industrial production rose by a seasonally-adjusted 0.2% during February, rebounding slightly from its revised declines of 0.1% in January and 0.3% in December.  According to the report, the rise in February came mostly from a 1.0% gain in the large manufacturing sector.  Output also increased 1.5% in the smaller mining industry, but that came after five straight months in which the production of petroleum and other mining products declined.  February utility production edged up 0.1%.  In contrast, construction output shrank 2.2%, following a 0.7% decrease in January.  That marked the construction industry's first back-to-back declines since late 2013.

On an unadjusted basis, overall industrial production in February was up 1.6% from the same month one year earlier.  Manufacturing output was up 4.0% year-over-year, and utility production was up 3.8%.  However, construction output was up a mere 1.1% year-over-year, and mining production was down 3.8%.

The report was released today by INEGI, the official statistics agency.

Comment:  The Mexican manufacturing sector continues to gain ground, in large part because of relatively strong U.S. demand for Mexican exports.  As reflected in the soft factory activity around the turn of the year, U.S. demand is currently facing some challenges, such as a tough winter, the strong dollar, and excessive inventories.  Nevertheless, economic growth in the United States remains strong enough to spur greater output from Mexico's manufacturers.  The growth in manufacturing has helped offset the downtrend in Mexican mining output.  The most worrisome aspect of today's report is the unexpected pullback in construction.  That sector had been in a strong recovery over the last year, so the declines in early 2015 are cause for concern.  It is not yet clear why construction has faltered, and there is a chance that the sector will resume its uptrend in the coming months.  If construction enters a new downward phase, however, it could be a significant headwind for the Mexican economy.   

Patrick Fearon, CFA
Portfolio Manager

Industrial Production 1502

Industrial Production Detail by Industry 1502

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