Full text of Mexico Economic Update : March 2013

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Mexico Economic Indicators

DALLASFED

FEDERAL RESERVE BANK OF DALLAS • MARCH 2013

Summary

 Mexico’s economic growth accelerated toward the end of 2012 after slowing in the third quarter. So far in
2013, employment has continued to grow at a moderate pace, and industrial production and retail sales have
risen. However, exports have fallen. Inflation has edged up, and the peso has continued to gain ground against the dollar.

Gross Domestic Product

Mexico’s economic growth recovered in the fourth
XX
quarter of 2012, rising 3.1 percent, compared with
1.5 percent in the third quarter. Overall, the Mexican
economy grew 3.9 percent year over year, which is the
same pace as in 2011. In 2012, service-related activities (including trade, transportation and government)
expanded 4.2 percent, while goods-producing industries (including manufacturing, construction, utilities
and mining) grew 3.6 percent. Agricultural output
increased 6.5 percent.

Annual growth rate (percent)
15
10
5
0
-5
-10
-15
-20
-25
-30

2007

2008

2009

2010

2011

2012

Exports

Exports fell 4.7 percent in January. Export growth
XX
trended down in 2012, suppressed by falling oil
exports. Exports rose a meager 3.9 percent in 2012, a
substantially slower pace than the 13.9 percent growth
of the prior year. Manufacturing exports increased 6.4
percent, while oil exports fell 7.5 percent.

Index, January 2000 = 100
350
Oil

300

Total
Manufacturing

250
200
150
100

50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Industrial Production

Industrial production (IP) increased 1.1 percent
XX
month over month in January after falling 2.2 percent
in December. U.S. IP grew 0.7 percent in February after
growing 0.1 percent in January. Mexico’s industrial
production typically tracks U.S. industrial production,
due in part to the U.S. automotive industry’s large
presence in Mexico.

Index, January 2000 = 100
125
120

Total

115

U.S. industrial production

Manufacturing

110
105
100
95
90
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Retail Sales

Retail sales grew 2 percent in January after falling
XX
3.6 percent in December. In 2012, retail sales declined
0.4 percent (December over December). Consumer
confidence fell in January for the second consecutive
month.

Index, January 2000 = 100
150
140
130
120
110
100
90
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Employment

Formal-sector employment—jobs with government
XX
benefits and pensions—expanded at an annualized
rate of 2.8 percent in January after growing 3.7 percent
in December. In 2012, formal-sector employment
grew 4.6 percent (December over December). Mexico
added over 715,000 formal-sector jobs in 2012.

Annual growth rate (percent)
10
5
0
-5
-10
-15

2007

2008

2009

2010

2011

2012

2013

Peso/Dollar Exchange Rate

After losing some ground against the dollar in
XX
November, the peso strengthened again the past three
months. The exchange rate was at 12.8 pesos per dollar
in February, down from 13.1 in November. The peso
has appreciated about 9.6 percent since June 2012,
when it reached its lowest value of the year, 13.9 pesos
per dollar.

Peso/dollar average
16
15
14
13
12
11
10
9
8
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Consumer Price Index

Inflation declined significantly the past four months
XX
but ticked up in February as prices increased 3.5
percent year over year. Although headline inflation is
still running slightly above the central bank’s target of
3 percent, prices, excluding food and energy, rose less
than 3 percent for the third consecutive month. The
central bank took advantage of the fall in inflation to
lower the policy rate to 4 percent, its first easing since
July 2009.

Year/year change (percent)
12
10
8
6
4
2

Long-term target

0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

NOTES: All data are seasonally adjusted except exchange rate. 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 Indicators is released the two weeks preceding regularly scheduled Federal Open Market Committee meetings.

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