FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 09 May 2016

Mexico Economic Activity Growing Modestly

from the Dallas Fed

-- this post authored by Jesus Canas

Mexico's economy continued growing into the first quarter. The government's monthly gross domestic product (GDP) measure increased in January and February. However, recent data on exports, employment and industrial production show weakening. Inflation appears firmly under control as the peso gained ground against the dollar for the second consecutive month in April. The consensus 2016 GDP growth forecast was revised down from 2.5 to 2.4 percent in April.

Output Growth Slows

Mexico's economic activity index, the monthly proxy for GDP, grew 0.2 percent in February after increasing 0.6 percent in January. The three-month moving average shows steady gains since the end of 2013 (Chart 1). Service-related activities (including trade and transportation) increased 0.5 percent in February, while goods-producing industries (including manufacturing, construction and utilities) fell 0.1 percent. Agricultural output dipped 1.7 percent.

Exports Fall Further in March

Exports dropped 2.2 percent in March after falling 0.9 percent in February. Three-month moving averages reveal a long-running decline in oil exports, while total exports have trended down since July 2015 (Chart 2). First-quarter total exports were down 7.7 percent, and manufacturing exports fell 5.1 percent compared with the same period a year ago. Oil exports dropped 45 percent year over year. Mexico's oil production is down more than 30 percent since peaking at 3.5 million barrels per day in October 2004.

Industrial Production Flat in February

Mexico's industrial production (IP) edged down 0.1 percent in February after growing 0.7 percent in January. Three-month moving averages are flat (Chart 3). Total IP, which includes construction, oil and gas extraction, and utilities, has been largely stagnant the past six months. Meanwhile, manufacturing IP continues to expand. U.S. IP fell 0.6 percent for the second straight month in March.

Retail Sales Expand in January and February

Retail sales grew 0.2 percent in February after jumping 2.7 percent in January. The three-month moving average shows deceleration during fourth quarter 2015, with a rebound into the first quarter (Chart 4). Sales were up 5.2 percent year over year in February. However, consumer confidence deteriorated in February and March.

Job Growth Slows in March but Still Up Strongly Year to Date

Formal-sector employment - jobs with government benefits and pensions - grew at an annualized rate of 0.8 percent in March, the lowest growth rate in three years (Chart 5). Employment rose an annualized 1.7 percent in the first quarter - down from 3.8 percent in 2015 (December over December) and 4.3 percent in 2014.

Peso Gains Ground Against the Dollar in April

The peso continued its comeback in April, averaging 17.5 pesos per dollar, which is a 5.4 percent gain over the February average of 18.5 pesos per dollar (Chart 6). The peso is still down 13 percent against the dollar over the past year. The Mexican currency has been weak, partly due to financial market turmoil resulting from weaker-than-expected global demand and the adverse impact of low oil prices on Mexico's government finances. Oil revenues typically account for about one-third of the federal government budget, but that share has been falling.

Inflation Dips Slightly in March

Prices increased 2.6 percent in March after rising 2.9 percent in January. Inflation is still below the central bank's long-term target of 3 percent (Chart 7). Prices excluding food and energy rose 2.8 percent. Mexico's central bank increased the policy interest rate for the first time since August 2008, boosting it by 25 basis points to 3.25 percent in December and again by 50 basis points in February to 3.75 percent. Agustin Carstens, Mexico's central bank governor, has made it clear that the central bank will not hesitate to use interest rate increases and currency interventions if it feels peso weakness will lead to higher inflation. The recent improvement in the peso - dollar exchange rate is likely a result of the central bank's surprise February rate hike.

About the Author

Cañas is a business economist in the Research Department at the Federal Reserve Bank of Dallas.


>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Minsky’s Theory of Asset Prices: Why Minsky Was NOT a Neo-Monetarist
Many (But Not All) Dynamics Improving But Federal Tax Receipts Are Down
News Blog
What We Read Today 18 January 2017
January 2017 Beige Book: Reading Between The Lines - Little Change in the Rate of Growth
15 Recent Science Discoveries You Wont Believe
December 2016 Industrial Production Up - Now In Expansion
December 2016 CPI: Year-over-Year Inflation Rate Now 2.1%
Advent Of Trade Reporting For U.S. Treasury Securities
Infographic Of The Day: Why Pets Make Us Happy
Early Headlines: Asia Stocks Mixed, Oil Up, Dollar Down, Obama Issued Fewer Exec. Orders, German Inflation 1.7 Pct, Pound Rally Temporary?, China Prop. Investment Stabilized And More
Democracy - 'End of History', Really?
Preview Of Dirk Ehnts' New Book
Britons Are Very Pessimistic About The EU's Future
Sherlock Holmes And The Strange Case Of Anti-intellectualism
Average Gasoline Prices for Week Ending 16 January 2017 Fell Almost 3 cents
Investing Blog Technical Summary 17 January 2017
Apple Takes The Wireless Headphone Market By Storm
Opinion Blog
Trump's 'Great Gambit'
More Proof The MMT's "Jobs Guarantee" Can't Work
Precious Metals Blog
Gold's 2016 Gain Indicates A 19% Surge In 2017
Live Markets
18Jan2017 Market Close: US Stock Markets Closed Mostly Higher, Crude Prices Slipping Further, US Dollar Trending Higher, Yellen Says US Economy Improving
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved