Mexico's April index of leading economic indicators declined to
99.8, after unrevised readings of 99.9 in March and 100.0 in
February. The index has now fallen for seven straight months,
and it stands at its lowest level since November 2009.
According to the report, the decline in April reflected weaker
readings in just two of the six subindexes. The subindex on
corporate managers' willingness to invest fell for a seventh
straight month, reaching 99.0, and the subindex on U.S. stock
prices inched downward to 100.3. In contrast, the subindex on
Mexican stock prices was flat at 99.8. The subindex on
interest rates rose to a 13-month high of 100.0, while the subindex
on manufacturing employment rose to a 27-month high of 100.4.
The subindex on the inflation-adjusted exchange rate jumped to
101.2, its highest level since August 2009.
The report was released earlier this month by INEGI, the
official statistics agency.
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
below 100 and falling, as it is now, it suggests the economy is
slowing and falling farther below potential. The main reason
for the fall appears to be the lull in the U.S. economy over the
winter, which weighed on Mexican exports and confidence in spite of
the low peso. Another problem has been the Mexican
government's effort to deal with lower oil revenues by cutting its
budget, even as the recovery in Mexico's housing market started to
lose steam. Fortunately, the most recent data suggest that
the U.S. economy is accelerating again, which may limit how much
the Mexican economy slows going forward.
Patrick Fearon, CFA