MexECON Blog

Fixed Investment Rises Further

Gross fixed investment in Mexico rose by a seasonally-adjusted 0.4% in April, after a revised 4.1% increase in March.  Prior to that, investment had plunged 3.8% in February.  According to the report, April machinery and equipment investment rose briskly, but investment in both residential and non-residential construction rose much more moderately.

On an unadjusted basis, total fixed investment in April was up 5.3% from the same month one year earlier.  Machinery and equipment investment was up 7.2% year-over-year.  Construction was up 4.2%.

The report was released on Friday by INEGI, the official statistics agency.

Comment:  Softer U.S. demand for Mexican exports over the winter has made some firms south of the border more cautious.  In the monthly index of leading economic indicators, a survey-based subindex on corporate willingness to invest has recently pulled back significantly, and while actual investment has continued to trend upward, the pace of growth has slowed.  Going forward, investment may still be held back to some extent by various foreign and domestic concerns, including the threat of contagion from the Greek debt crisis, a likely hike in U.S. interest rates later this summer, low global oil prices, and falling petroleum production in Mexico itself.  Nevertheless, I remain optimistic that reaccelerating economic activity in the United States could keep Mexican investment on an uptrend in the coming months. 

Patrick Fearon, CFA
Portfolio Manager

Fixed Investment 1504

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