MexECON Blog

January Fixed Investment Rises 1.5 Percent

Gross fixed investment in Mexico rose by a seasonally-adjusted 1.5% during January, erasing its revised 0.8% decline in December.  Mexican fixed investment has now risen in three of the last four months.  According to the report, the rise in January stemmed entirely from a strong increase in machinery and equipment investment.  That category jumped 6.4%, erasing its 2.7% decrease in December and marking its strongest gain since mid-2012.  In contrast, investment in new construction edged down 0.1%, after a 0.4% decrease in the previous month.  Residential construction alone dropped sharply in January, although that came after a big gain in December.  On a more positive note, non-residential construction rose moderately during the first month of the year.

On an unadjusted basis, total fixed investment in January was up 7.3% from the same month one year earlier.  Machinery and equipment investment was up 13.7% year-over-year, while construction was up 3.4%.

Comment:  Several data series suggest commercial investment in Mexico continues to trend upward, providing much of the country's moderate economic growth in recent quarters.  Residential construction has also been in recovery, but soft homebuilding around the end of 2014 raises some concern.  The softness suggests the rebound in housing could be losing some steam.  Nevertheless, I expect that overall fixed investment will continue to boost the economy in the near term, driven by the relative strength in Mexican exports and industrial production (outside of the petroleum sector), as well as a slowly strengthening labor market that holds out the promise of stronger consumer spending going forward.

Patrick Fearon, CFA
Portfolio Manager

Fixed Investment 1501

Fixed Investment by Type 1501

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