MexECON Blog

Fixed Investment Takes a Breather

Gross fixed investment in Mexico fell by a seasonally-adjusted 0.9% in May, after revisions showed a 0.4% rise in April and a 4.0% jump in March.  According to the report, machinery and equipment investment pulled back by a slight 0.5% during May, after two months of strong gains.  More significantly, construction dropped 1.1%, reflecting decreased activity in both residential and non-residential building.

On an unadjusted basis, total fixed investment in May was up 2.3% from the same month one year earlier.  Machinery and equipment investment was up 3.6% year-over-year in May, while construction was up 1.5%.

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

Comment:  Mexican investment is still trending upward, but the rate of increase has slowed, and monthly declines seem to be happening more frequently.  That probably reflects a number of factors, such as low global oil prices, softer Mexican exports, and concerns about a likely hike in U.S. interest rates later this summer.  Besides, Mexico's current economic expansion is already quite mature, so moderating investment and slower growth are to be expected.  However, moderating investment and growth do not necessarily point to an impending pullback.  It looks to me like the Mexican economy has enough momentum to keep expanding, albeit at a slower pace, and that is likely to keep investment in Mexico on a moderately upward trajectory.

Patrick Fearon, CFA
Portfolio Manager

Fixed Investment 1505

0 comment(s) for “Fixed Investment Takes a Breather”

    Leave a Comment

    Name:
    Website:
    Comment:

    Archive