Economics: Weak Industrial Sales Data
Industrial activity showed only moderate growth in May as production increased a scant 0.4% on a 12-month, seasonally adjusted basis.
While both the construction sector (+3.2% year on year) and utilities (+6.3%) experienced very positive results, their contribution was largely offset by yet another contraction of the mining sector (-4.5%). At the same time, the production of manufactures increased only slightly (+0.4%) during the month.
Within the manufacturing sector performance varied considerably from sector to sector but those that experienced the most pronounced percentage increases in output were the pulp and paper industry (5.6%), plastics and rubber industries (5.8%), the manufacture of machinery and equipment (7.2%) and the manufacture of computer, communications and measuring equipment as well as other electronic equipment, components and accessories (7.7%). The components that experienced the most pronounced contractions were those of basic metals industries (-6.0%), the production of oil and coal derivatives (-7.1%) and the wood industry (-8%).
In this week’s Panorama section we offer a detailed look at the main sectors of Mexican industry.
In other news, retail industry association Antad reported that during June the total sales of affiliated retailers increased by a real 5.9% compared to a year earlier. Sales at locations that have been open at least for a full year grew a real 2.7%, which marked a slowing compared to the average 4.6% year on year increase experienced on average between January and May of the current year.
During the first months of 2016 internal consumption remained strong, but sales results as we reach the final part of the first half of the year appear to point towards slightly weaker consumption growth during the final six months of the year.
It is worth noting that despite the extent of mid-year promotions and discounts June sales failed to keep pace with the strong growth reported for the first months of the year.
At week’s end Banco de México released the minutes of the most recent rate review by the monetary authority, the same meeting at which it was decided to raise the bank’s reference rate 50 basis points to 4.25%. The text showed central bank governors concluded that the weakening of the peso has begun to affect prices domestically while failing to deliver any of the favorable results that had been expected on the level of Mexico’s export sales. Moreover, they noted that goods inflation is running near 4% and moving higher, a trend that is unlikely to be reversed any time soon given the peso’s own negative performance.
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