🇲🇽Scotiabank: Mexico Industrial Production Cools Down

• Data released by Mexico’s statistical agency (INEGI) on June 11, showed April’s industrial production declined m/m for the first time since June 2020. The 0.2% m/m decline took place after 10 consecutive months of growth in a context of reopening of economic activity.

• By components, mining was the only sector to register growth of 1.0% m/m, recovering from a previous 3.0% m/m contraction. Utilities decreased -1.0% m/m (from the previous 5.0%); construction declined -0.3% m/m (unchanged from the previous month); and manufacturing fell -0.5% m/m (from an earlier 3.0% m/m).

• In annual terms, industrial production grew 36.6% y/y, slightly below the 37.6% y/y expected by the market, and mainly attributed to base effects (chart 1). Recovery continues to be uneven, with manufacturing (+52% y/y) boosted by the external sector, while mining (+5.5% y/y) has benefitted from the recovery in commodity prices. By contrast, construction (+45% y/y) and utilities (-3.1% y/y) have been slower to improve given the still-weak domestic demand.

• in the coming months, we expect little change on an annual basis. Monthly comparisons will provide a greater sense on the strength of the recovery. For the rest of 2021, we maintain our view that solid external demand along with rising domestic demand will sustain Mexico’s industrial production recovery, albeit in an environment of persistent uncertainty.