Economics: A new round of mixed indicators in April
Economic news this past month portrayed an economy in which some segments continue to struggle to sustain or regain growth even as more general indicators outperform expectations. A case in point was last week’s Global Economic Activity Index or IGAE, which showed the Mexican economy cruising along at a 2.3% rate in February, almost double the expansion registered a year earlier and considerably stronger than this past January’s roughly one point rise. Less encouraging was the extent to which the month’s improved performance was achieved, yet again, almost exclusively on the strength of the service sector, although industrial activity contributed. Such news adds to our perception that this week’s GDP report will show the Mexican economy grew 1.9% during the first quarter of 2018 and that the economy will sustain a similar pace of growth throughout most of the current year.
Also on a positive note, the rate of inflation continued to ease through the first half of April and reached its lowest level in well over a year, but it remains more than a full percentage point above the upper band of the central bank’s tolerance range.
Evidence is similarly mixed on other fronts. Gross Fixed Investment slightly hastened its pace in February, the latest in a string of months in which modest-to-minimal growth has alternated with similarly restrained contractions, as that indicator struggles to shake off last year’s decidedly negative trend. The leading index for February 2018 was unchanged from the previous month even as it managed a thirteenth consecutive positive result that left it in expansion territory. The index of industrial activity for February proved to be positive but marked the latest in a string of months in which modest to minimal growth has alternated with similarly restrained contractions as the secondary sector struggles to shake off last year’s decidedly negative trends. And private consumption continued to slow.
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