Mexican industrial production was unchanged in
seasonally-adjusted terms during March, after a revised increase of
0.3% in February. According to the report, March mining
output was down 1.6%, for its 13th decrease in the last 16
months. In addition, output from the key manufacturing sector
was down 1.0%, wiping out its 1.0% rise in February. Utility
production was unchanged. On a more positive note, March
construction output jumped 3.0%, almost erasing the two previous
months of declines.
On an unadjusted basis, Mexico's overall industrial production
in March was up 1.7% from the same month one year earlier.
March mining production was down 5.3% year-over-year, but utility
production was up 3.0%, and manufacturing output was up 3.1%.
Construction output was up a strong 5.2% year-over-year.
The report was released today by INEGI, the official statistics
Comment: Without a doubt, the
unrelenting decline in oil production is a key factor holding down
Mexico's overall industrial production. The government's
reform allowing private-sector investment in the energy industry
could eventually spark a turnaround, but not in the near
term. For now, years of under-investment and the more recent
slide in global oil prices will continue to undercut output.
Just as important, a slowdown in U.S. industrial activity has
cooled the demand for Mexican exports, cutting activity in the
Mexican factory sector. U.S. firms are likely to face a
protracted period of weak economic growth in Europe and Asia, a
strong dollar that further weighs on foreign demand, reduced energy
investment, and bloated inventories. Fortunately, however,
today's report shows that the recovery in Mexico's private-sector
construction is continuing. Coupled with a stronger labor
market that should support improved consumer spending, the
continuing uptrend in private investment should help offset the
slowdown in mining and manufacturing.
Patrick Fearon, CFA