Mexico posts impressive growth rate despite fall in IP

Mexico's economic activity has surprised to upside in recent months considering the slowdown in industrial production. While industrial production growth over past six months (including the July 2015 release) slowed to 1.0% yoy from 2.0% in the previous six months, overall economic activity growth accelerated to 2.42% yoy from 2.40%. 

The contribution of other sectors (excluding IP) to growth has risen substantially over the past few months. H1 GDP data shows that while IP growth slowed to 1.5% yoy in Q1 and 0.6% in Q2, the services sector accelerated to 3.0% yoy and 3.1% over the same period, says Societe Generale in report on Thursday. 

The weakness in IP growth of the country is predominantly driven by the decline in mining production, which is facing adverse demand and price conditions. Therefore, manufacturing growth over tha past six months was also slower than the previous six months and it remains to be seen whether stronger US demand alone can pull the overall IP sector out of the current phase of mild slowdown, added SocGen.