Mexican industrial production output likely to rebound in October – Wells Fargo

The Mexican industrial production continued to weaken in September. The output dropped 1.2 percent year-on-year, whereas it fell 0.4 percent on sequential basis. Manufacturing output recorded a comparatively solid year-on-year rate of 2.8 percent growth, but it softened on sequential basis falling 0.1 percent. The collapse of mining output mainly drove the decline in industrial production, which is mostly due to oil production.

Mining output dropped sharply by 6.2 percent sequentially and 15.1 percent year-on-year. In the meantime, construction activity was subdued but positive on a year-on-year basis, rising 0.1 percent. Utilities output rose 1.4 percent year-on-year and 1.8 percent sequentially.

According to a Wells Fargo report, the Mexican industrial production output is likely to recover slightly in October even if it was weak in September. The Mexican automobile sector reports for October have been quite robust in terms of production and exports as well. Therefore, the manufacturing sector is likely to have surged in October.

Meanwhile, construction activity is also likely to rebound from current readings as a consequence of the earthquake, aiding the October index. The production of petroleum is unclear for the months ahead. Even if the production of petroleum has been affected by the earthquake in September, the industry was still indicating a weak performance before the earthquake. But some recovery is expected to be seen in the petroleum production on a sequential basis because the decline in petroleum output was very severe than any rebound will be seen in the monthly figures.

“Thus, we should expect a relatively strong comeback of industrial production next month”, added Wells Fargo.

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