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