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
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