Economic Monthly report
The economic data released in July produced further evidence of continuing growth in key parts of the Mexican economy. Spending sustained its expansion in April as Mexico’s index of private consumption rose an annual 5.0% according to seasonally adjusted data: imported goods acted as the main driver by expanding 9.3%, but got help from purchases of domestically produced goods (+4.7%) and services (+4.9%). Exports and private consumption remain the main contributors to the economy even as public spending is acting as a drag on growth, and fixed investment is stalling.
At the same time, unemployment fell to a new historical low for any month of June, as underemployment narrowed to 2007 levels. In addition, growth in manufacturing payrolls remains strong, with May’s 3.6% increase almost a full point improvement over year earlier gains.
But familiar signs of weakness have also been on display. Gross fixed investment for April was off by 2.7% as growth in spending on machinery and equipment was more than offset by a significant decline in the construction component. June produced another deepening of business and consumer pessimism, domestic auto sales are flagging, and despite robust growth in the key manufacturing segments of transportation and computer equipment, as well as M&E, industrial output showed only a marginal increase (0.1% yoy) in May, although that single basis point managed to snap a five-month streak of negative readings.
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