Mexico’s July industrial output growth slows to 0.2pc

Mexico's industrial production growth slowed to just 0.2pc in July from the previous month, statistics agency Inegi reported Tuesday, supported by rebounds in construction and non-oil mining.

The monthly gain in industrial output, following a 0.4pc increase in June and a 0.7pc gain in May, marked a fifth month of expansion in the seven months through July.

Seasonally adjusted, construction led major components in July, expanding by 2.6pc over June, with mining expanding by 1.4pc over the previous month.

Oil and gas extraction, however, was down by 0.2pc from the previous month, after 0.5pc growth was reported in June. The segment has now shown contraction in 10 of the last 12 months.

Extraction of other minerals, however, increased by 0.4pc over the prior month, after a 4.6pc decline reported in June. Mining-related services also rebounded, up 14.8pc in July after a 9.7pc contraction in June.

Manufacturing reversed course in July, registering a 0.8pc contraction from the previous month after posting a 2pc expansion in June.

This is largely the result of the auto manufacturing segment posting a monthly contraction of 3.1pc in July after a 5.8pc expansion in June.

The auto segment comprises 24pc of the manufacturing component in Inegi's monthly industrial activity report (Imai), and manufacturing accounts for 63pc of nationwide industrial activity.

Auto output, however, should rebound in August with INEGI reporting Monday that light vehicle production in August was up almost 20pc from July.

Meanwhile, the utilities component — tracking provision of electric power, water and natural gas — contracted for a second consecutive month, down 0.9pc in July after a 0.2pc contraction recorded in June.

Manufacture of products derived from oil or coal expanded for a second month, up 3pc in July on a monthly basis after a 10.6pc jump in June.

Looking ahead, Mexican bank Banorte said, "We believe that the bias for industry in the remainder of the year will be negative, with headwinds for construction and manufacturing."

Some drivers, it said, include: "weakness in US industry; lower base metal prices due to a global economic slowdown, especially in China; the completion of local infrastructure works; and some circumstantial factors that have added volatility within different sectors."

Nevertheless, Banorte's industrial outlook for 2025 and the medium-term remains positive as the major infrastructure projects for the incoming administration get underway.

By James Young