Economics: Export sector continues to grow even as obstacles slow the pace of recovery
The export sector has been the main driver of Mexico’s economic recovery so far in 2021, but that catalyst has not been firing evenly on all cylinders. As industries make up for the time and output lost last year, most branches’ installed capacity utilization has recovered to, or improved upon pre-pandemic levels. But the bottlenecks that have developed throughout supply chains globally are starving industries of essential inputs, including the semiconductors so essential to most electronic devices, deficits that have led to temporary assembly line shutdowns at car manufacturers, the fastest growing and weightiest value-added component in Mexico’s manufacturing industry.
Those supply woes were in evidence — alongside a more challenging base effect — in last week’s industrial activity report for August, as the pace of recovery continued to slow for a fourth straight month. Manufacturing, construction and extractive industries all continued to grow even as utilities contracted under the weight of a major drop in electric power generation. But the crucial transportation sector was one out of only two manufacturing industries that contracted as exports of automotive vehicles continued to accelerate their fall.
Plant capacity utilization among most manufacturing branches had rebounded by the first half of 2021 to well above its lows from early in the pandemic, but since then it has been trending lower in many branches relative to levels of preceding months. And while utilization has climbed back to around 80% in many branches and even approached 90% in some cases, the extent of uncertainty currently prevailing has not generated the degree of usage that could justify investing in capacity expansion.
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