MexECON Blog

April Industrial Production Falls Slightly

Mexican industrial production fell by a seasonally-adjusted 0.1% in April, after revised increases of 0.1% in March and 0.3% in February.  According to the report, the drop in April stemmed in large part from another sharp drop in mining output.  Production from the country's mines, oil and gas fields, and associated service firms fell by 3.6%, after a 2.0% decline in March.  Production from Mexico's mining sector has now fallen in 14 of the last 17 months, leaving it at its lowest level since November 1995.  Output from Mexican utilities also decreased in April, but only by 0.2%.  April construction output rose 0.1%, reflecting modest increases in building erection, public works, and activity in the construction trades.  Most encouraging, April manufacturing output jumped 2.0%, erasing its 1.2% pullback in March and reaching a new record high.

On an unadjusted basis, overall industrial production in April was up 1.1% from the same month one year earlier.  April mining output was down 8.3% year-over-year, but utility production was up 1.7%, and manufacturing output was up 3.7%.  April construction output was up a healthy 4.8% year-over-year.

The report was released last week by INEGI, the official statistics agency.

Comment:  The unrelenting slide in Mexican oil production is weighing heavily on overall industrial activity.  The government's reform allowing private-sector investment in the energy industry is being implemented, and it could eventually spark a rebound.  For now, however, low oil prices and the slow process of leasing, planning, and developing new projects mean that the country's oil output is likely to keep sliding for a while yet.  On a more positive note, recent data from the United States and Mexico suggests the manufacturing sector may be ready to accelerate again after a soft spot during the winter.  Just as important, increased construction activity over the last two months provides welcome evidence that the recovery in that sector is still in place, after a worrisome setback at the beginning of the year.  Coupled with a stronger labor market that should eventually support improved consumer spending, any strengthening in construction and manufacturing could help ensure that the overall economy can keep growing moderately.

Patrick Fearon, CFA
Portfolio Manager

Industrial Production 1504

Industrial Production Detail by Industry 1504 B

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