Mexico’s First-Quarter Growth Revised Higher

from the Dallas Fed

— this post authored by Jesus Canas

Mexico’s economy grew faster in first quarter 2017 than previously estimated. Gross domestic product (GDP) increased 2.7 percent, according to the government’s second estimate. Consequently, the consensus 2017 GDP growth forecast was revised to 2 percent from 1.7 percent in April.

Other, more recent data were mixed; employment growth improved, but exports, industrial production, and retail sales fell. Inflation rose further while the peso held steady against the dollar.

Revisions Boost Output Growth

Revisions to Mexico’s first-quarter GDP estimate boosted annualized growth from 2.4 percent to 2.7 percent (Chart 1). Service-related activities (wholesale and retail trade, transportation and business services) expanded at more than 4 percent. Goods-producing industries grew about 0.5 percent overall, though subsectors’ performances varied. Output in mining, as well as in electricity, water and gas fell more than 7 percent, while manufacturing activity rose nearly 8.5 percent. Agricultural output growth was revised 4.5 percent higher.

Exports Ease in March and April, but Rise Year to Date

Total exports dropped 2.7 percent in April after remaining little changed in March. However, a more than 4 percent surge in both total and manufacturing exports during February continues to push the three-month moving average higher (Chart 2). Despite recent weakness, total and manufacturing exports are up year to date. Total exports increased 7.5 percent year to date through April relative to the same period in 2016, while manufacturing exports rose 5.6 percent. Oil exports were up 47 percent in the first four months of 2017 compared with the year-ago period.

Overall Industrial Production Stumbles Despite Manufacturing Growth

Industrial production (IP), which includes manufacturing, construction, oil and gas extraction, and utilities, fell for a third consecutive month in April. Data revisions also turned February’s initial uptick into a negative move. All told, IP fell 0.3 percent in April and 0.2 percent in March after falling 0.1 percent in February. In contrast, manufacturing IP expanded at a solid 0.6 percent in April.