Mexico's industrial production dropped by 1.2pc in October, driven by declines in manufacturing and mining, statistics agency Inegi said today.
The seasonally adjusted industrial activity indicator (IMAI) reversed a 0.6pc increase recorded in September, surprising analysts who had expected a smaller contraction. Banorte had forecast a 0.1pc decline, while the market consensus pointed to a 0.6pc decrease.
The sharper-than-expected downturn was largely attributed to a 1.9pc drop in manufacturing, which accounts for 63pc of the IMAI. This followed growth of 1pc in September and 0.4pc in August. Within manufacturing, transportation manufacturing — a key segment making up 12pc of the sector —fell by 4.3pc, reversing a 2pc increase in September and a 1pc uptick in August.
Despite this decline, light vehicle production reached 382,101 units in October, up from 378,583 in September, on track to set a new annual record. Mexican auto industry association AMIA told Argus the drop in transportation manufacturing was unrelated to light vehicle production. Instead, Alejandro Cervantes, director of quantitative economic research at Banorte, suggested the decline could be linked to trucks and heavy-duty equipment manufacturing.
"Despite [being] a negative month for industrial activity and possibly for aggregate economic activity, the fact is that we have seen a strong rebound in the production of vehicles," said Cervantes.
Mining, which makes up 12pc of the IMAI, contracted by 1.9pc in October, following a 1.2pc decline in September. Oil and gas extraction fell by 0.9pc, marking its fourth consecutive month of contraction.
In contrast, construction — accounting for 19pc of the IMAI — increased by 0.5pc in October after a 1.1pc increase in September.
