Economics: June news points to further slowing

MEXICO - Report 01 Jul 2019 by Mauricio Gonzalez and Francisco González

Buffeted signs of a global slowdown, continuing trade pressures, and not an insignificant number of unforced errors on the part of the government, economic news during June offered further evidence that the Mexican economy continues to lose steam.
Aggregate demand grew a scant 0.1% during the first quarter of 2019 compared to the same three month period of 2018 (+1.4% according to original series data), and gross fixed investment accelerated its fall with a 3.2% contraction as a plunging public sector component was joined for a second quarter by a contraction of private GFI.
Private consumption fell an annual 0.76% in March owing largely to lower sells of both domestic and imported durables as the market for automobiles continued to take a beating. The automotive industry reported that a drop in auto sales in March was followed by dives of 11.0% and 11.6%, respectively, in April and May.
A 0.4% annual fall industrial production during April could have been worse if not for manufacturing registering its strongest increase in seven months that was largely the result of a low comparison that probably will not be repeated in the coming months. For the first four months of the year, industrial activity fell a cumulative 1.3%. And Mexico’s monthly GDP proxy (IGAE) grew a mere 0.3% year on year in April in another sign that the slowdown in production is likely to continue going forward.
Even indicators that showed positive results failed to deliver anything like a silver lining. The number of people working in the manufacturing sector grew a seasonally adjusted 1.1% year on year in April, but that was its weakest result since February 2010. The Consumer Confidence Index extended its almost yearlong rebound through May with a 29.6% rise above levels of a year earlier, but that positive momentum has dissipated considerably from the from the far more robust figures of past months, a development that is even more apparent on a sequential basis. The CCI stumbled a seasonally adjusted 2.5% in May following contractions of 1.9% in March and 3.1% in April.

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