Mexico Industrial Production: Despite December’s decline, details shows a better picture - Wells Fargo

Industrial production in Mexico dropped 0.1% in December. Analysts from Wells Fargo, pointed out that despite the decline, manufacturing output rose 0.6% and utilities production 0.5%, giving a better picture for the sector. 

Key Quotes: 

“A 1.4 percent plunge in mining production and a 0.3 percent decline in construction activity made the Mexican industrial production index for December look much worse than it was as manufacturing output increased 0.6 percent during the month and utilities output inched up 0.5 percent, all of the numbers compared to the previous month. On a year-over-year basis, mining production plunged 10.3 percent, public utilities output was up 3.9 percent, construction activity was up 2.4 percent and the manufacturing sector was up 2.5 percent, all on a seasonally adjusted basis. Still, Manufacturing Weakness Persists However, looking at the year-over-year, non-seasonally adjusted numbers, the story for the industrial sector still reveals a very weak performance as 2016 got to a close.”

“The manufacturing sector was driven by sectors other than the production of automobiles during 2016. The production of computers, communications and electronics equipment increased at the fastest pace, up 6.1 percent year over year, while production of machinery and equipment increased 3.4 percent.”

“The fact that U.S. automobile demand has remained so strong, while Mexican automobile production barely increased in 2016 adds to our concerns that the sector continues to be affected by the current political uncertainty regarding the future of NAFTA. Some of the improvement in automobile production during the last quarter of 2016 was probably related to the strong depreciation of the Mexican currency during that time, and this could help the sector during the first quarter of 2017. However, the sector will need more clarity to continue to add to its output during 2017.”