MexECON Blog

Fixed Investment Rebounds Strongly in March

Gross fixed investment in Mexico jumped by a seasonally-adjusted 4.0% in March, erasing its 3.8% plunge in February and reaching a new record high.  According to the report, the rebound in March reflected healthy increases in machinery and equipment investment and in construction.  Within the construction sector, residential building rose almost enough to offset the two previous months of declines, while non-residential construction rose slightly.

On an unadjusted basis, total fixed investment in March was up 6.6% from the same month one year earlier.  Machinery and equipment investment was up 10.5% year-over-year, while construction was up 4.1%.

The report was released earlier this month by INEGI, the official statistics agency.

Comment:  The rebound in investment during March is encouraging, but the uptrend still seems to be slowing.  That makes sense, given recent headwinds such as softer U.S. demand for Mexico's exports.  The most recent data suggest the U.S. economy started to rebound in the second quarter, but it may take some time before better U.S. demand starts to prompt stronger investment activity in Mexico again.  Perhaps the best news in the fixed investment report was that homebuilding rebounded so strongly in March.  The recent report on Mexican industrial production had already shown that overall construction rose in March, but the fixed-investment report showed that the rise in construction stemmed mostly from residential construction.  The year-long recovery in Mexico's housing market had seemed to be faltering in recent months.  Now, there is some hope that the rebound will continue, though we won't know for sure until we see a few more months of data.

Patrick Fearon, CFA
Portfolio Manager

Fixed Investment 1503

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