Full text of Mexico Economic Update : June 2012

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Mexico

Economic Update

June 2012

Summary
Mexico’s economy accelerated in the first quarter, growing 5.3 percent quarter over quarter. Industrial production advanced in March, and employment continued growing in April. Exports were flat in April, and retail sales
fell in March. The peso has depreciated considerably against the dollar since March, while inflation fell for the
third consecutive month in April.
Mexico GDP
Percent annual growth rate

15
10
5

0
-5
-10
-15
-20
-25
-30
2007

2008

2009

2010

Exports were flat in April, up only 0.2
percent over March. Manufacturing
exports increased 3.6 percent, while oil
exports fell 7.7 percent. Total exports
increased by just 6.8 percent during the
first four months of the year, a substantially slower pace than the 17.8 percent
growth seen over the same period in
2011. Since December, oil and manufacturing exports have grown 4.5 percent and 6.6 percent, respectively.

2011

2012

First quarter 2012 GDP grew 1.3 percent quarter
over quarter (5.3 percent growth at an annualized rate), up from 0.7 percent in the fourth quarter of last year (2.9 percent at an annualized
rate). In first quarter 2012, agricultural output
grew 2.4 percent, and the remaining goodsproducing industries, including manufacturing,
construction, utilities and mining, expanded at a
1.5 percent rate. Service-related activities
(including trade, transportation, services and
government) grew 0.8 percent from the previous
quarter. The 2012 GDP growth forecast has been
revised up to 3.6 percent.

Index, January 2000 = 100

Mexico Exports

350
300

Oil

250

Total

200

Manufacturing

150
100
50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mexico Industrial Production

Index, January 2000 = 100

120
Total

115
Manufacturing

110
105

U.S. industrial
production

100
95
90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Industrial production (IP) grew 1.5 percent month over month in March after
falling 1.4 percent in February. U.S. IP
fell 0.5 percent in March and grew 1
percent in April. Mexico’s IP typically
tracks U.S. IP, due in part to the U.S.
automotive industry’s large presence in
Mexico. However, since the end of the
recession, Mexican IP has grown much
faster than U.S. IP, which has yet to
reach its prerecession peak.

Mexico Retail Sales
Index, January 2000 = 100

Retail sales fell 0.6 percent month over month in
March after growing 0.2 percent in February.
Year over year, retail sales grew 4.1 percent.
Consumer confidence was essentially flat in
May after rising 2.1 percent in April.

150
140
130

120
110
100
90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mexico Formal Employment

Annual growth rate (percent)

10

Employment growth continues, albeit
at a slower pace. Formal employment—
jobs with government protections and
pensions— expanded at an annualized
rate of 3.1 percent in April (month over
month), down from 5.5 percent growth
in the first quarter (annualized rate).
Since December, Mexico has added
over 246,000 jobs.

5

0

-5

-10

-15
2007

Peso/dollar average

2008

2009

2010

2011

2012

Peso/Dollar Exchange Rate

16
15
May: 13.7

14
13
12

11
10

The peso has weakened 6.6 percent against
the dollar since March. The exchange rate
averaged 13.7 pesos per dollar during May,
up from an average of 12.8 in March. In late
May, Mexico’s central bank bought pesos in
the exchange rate markets in an effort to
reduce exchange rate volatility resulting
from global uncertainty. The central bank
last intervened in December 2009.

9
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mexico Consumer Price Index
Inflation fell in April relative to March. Prices
rose 3.4 percent year over year in April, which
compares with a 3.7 percent increase in March.
Falling fruit and vegetable prices contributed to
lower inflation in April. In addition, energyrelated prices also dropped. Without food and
energy, prices increased 3.4 percent year over
year in April and 3.3 percent in March. Banco de
México has kept the benchmark interest rate at
4.5 percent since August 2009.

Year-over-year percent change

12
10
8
6
4
2

Long-term target

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

NOTES: All data are seasonally adjusted except exchange rate. GDP, exports and retail sales are in real terms.
SOURCES: Gross domestic product, industrial production, consumer price index and retail sales: Instituto Nacional de Estadística y Geografía; exports, exchange
rate: Banco de México; formal employment: Instituto Mexicano del Seguro Social; U.S. industrial production: Federal Reserve Board.
Questions can be addressed to Jesus Cañas at jesus.canas@dal.frb.org. Mexico Economic Update is released two weeks before regularly scheduled Federal
Open Market Committee meetings.