Balancing Act
Last week, President Enrique Peña Nieto called for a national accord to promote productivity. According to government data, productivity is off by 0.7% compared to a year earlier. The president announced that he had ordered the creation of a consultative body, the National Committee on Productivity, that has been given the task of conducting an analysis of matters of productivity, suggesting alternative proposals for increasing it, making recommendations on job training and reskilling, and issuing an opinion on how best to apply resources in such matters. The main productivity-related policy axes are: to promote the efficient use of productive resources throughout the economy, strengthen the business environment, generate conditions conducive to businesses' expanding their productivity, and to develop regional and sectoral productivity policies.
The national statistics office reported that the number of people employed in manufacturing grew at a 12-month rate of 2.0% in March 2013, a modest increase, albeit one in line with the 2.1% average of the previous 20 months.
Payroll results have varied significantly by sector component, with the most pronounced factory payroll growth continuing to be reported at factories that are most closely related to the automotive industry. The most pronounced case in point was the manufacture of transport equipment, which accounted for 1.5 percentage points or 78% of the 2.1% overall expansion of manufacturing employment. Next in line was the production of computer and communications equipment and accessories, which accounted for 0.46 points of factory payroll growth.
Although we continue to observe certain resilience in job growth at the factory level, manufacturing pay and benefits have been moving in the opposite directions. In March, these labor costs fell at a real 12-month rate of 4%, the most pronounced such drop this indicator has recorded since the authorities first began publishing it in January 2008. That abrupt decline largely reflected the effect of high inflation on a very marginal rate of nominal remuneration growth.
Mexico also reported last week that it had posted a US$ 1.23 billion trade deficit for April 2013 (analysts at GEA had estimated a US$ 787 million deficit), which marked a significant reversal of the US$ 419 million surplus recorded for April 2012. Exports rose 6.4% while imports widened 11.8%.
Weakness in the country's trade performance reflected, in part, a 28.3% rise in imports of non petroleum consumer goods. During the first four months of the year Mexico recorded a US$2.25 billion deficit.
Lastly, Mexico recorded a P$39.8 billion public sector surplus for the first four months of 2013, which marked a significant reversal of the P$41.37 billion deficit reported for the same period a year earlier.
The most noteworthy aspect of the latest report was the real 1.3% rise for January through April in tax revenues, which slightly outpaced economic growth for the same period. The two taxes most associated with income (corporate and personal income tax or ISR, and the single rate business tax or IETU) each grew more than GDP for the period at inflation adjusted rates of 4.4% and 30.4%, respectively, at the same time as receipts for the consumption based value added tax were off by a real 6.6% in a sign of a sluggish internal market.
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