- Mexico: Industrial production surprised to the upside with monthly rebounds in construction and manufacturing in January
MEXICO: INDUSTRIAL PRODUCTION SURPRISED TO THE UPSIDE WITH MONTHLY REBOUNDS IN CONSTRUCTION AND MANUFACTURING IN JANUARY
In January, industrial activity increased 2.9% y/y after stagnating 0.0% in December. Construction rebounded 17.9% (14.8% previously), utilities moderated 0.6% (2.2% previously), manufacturing rebounded slightly 0.1% (-4.0% previously) and mining deepened its decline to -1.6% (-1.2% previously). In the monthly comparison, industrial production rebounded 0.4% m/m from a previous -0.7%, with seasonally adjusted monthly figures. Construction and manufacturing increased 2.2% and 0.2% respectively, while utilities dropped for the fifth consecutive time -0.8%, and mining fell -0.4%.
On one hand, construction continues with double digit increases, mainly supported by civil engineering works (+53.4% y/y), facing some pressure to finish the public projects of the current administration, so we believe that construction will slow down as the change of administration approaches and the emblematic works are finished (chart 1).
On the other hand, energy and utilities is stagnant, with no clear signs of changing its trend, as the index stands at 66.71 points, far from the base year 2018=100 points (chart 2). Mining shows a decline in two of its three components, oil and gas (-2.5%) and metallic minerals (-0.4%), see chart 2 again.
Lastly, manufactures have been quite irregular, even with annual declines during 2023, in line with the performance of the sector in the United States, which has also been down. The exception to this performance is transportation equipment, although it presented a more moderate advance in January (0.5% vs. 4.8% in all of 2023). The main components with declines were leather products (-12.8%), wood (-6.8%), machinery and equipment (-6.2%), paper (-6.8%) and textiles (-0.7%). Manufacturing could have an important recovery if trade with the U.S. continues to increase and nearshoring projects materialize, and we believe that less restrictive rates could help the recovery of the sectors with greater setbacks (table 1).
—Brian Pérez & Miguel Saldaña
DISCLAIMER
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.