Mexico's industrial production likely to have expanded in April

Mexico’s industrial production is expected to have expanded in April following a sharp drop in March. Before declining in March, industrial output had grown at its fastest pace in 14 months in February. This was due to rapid growth in manufacturing and slowdown in mining. In February, growth in other sectors such as water, construction, gas and electricity also grew strongly.

But the overall drop in industrial sector in March was more wide-based as compared to February’s growth. The manufacturing sector, in particular, recorded its first fall since June 2013, whereas growth in mining was the least since August 2015.

Supposing that the last two months were an aberration and that the industrial production will resume its recent path in a mildly decelerating demand situation, the industrial production is likely to have expanded 0.6 percent y/y and 0.4 percent m/m in April, said Societe Generale in a research report.

The solid phase of contraction seen in mining is expected to be almost over, and even if the mining sector does not significantly contribute in the next year, it is still expected to aid the overall industrial production growth to be at a higher level as compared to recent months. But, manufacturing sector that will be impacted by a decelerating US economy might pose a downside risk to the industrial production growth, noted Societe Generale.