Mexican economic outlook improved

Mexican economic outlook improved says The Conference Board, after the country’s Leading Economic Index increased 1.7% in June, the fourth successive rise, and its Coincident Economic Index, which rose 0.3%, continued to climb through the first half of 2014.

A country’s Leading Economic Index (LEI) predicts future economic activity – an increasing number means the economy is more likely to grow. The Coincident Economic Index (CEI) shows the economy’s situation at the moment. Analysts use the CEI to see where in the economic cycle a country’s economy currently stands.

Mexico’s Leading Economic Index

Of the six components that make up Mexico’s LEI, five contributed positively to June’s figure.

Below is a list of the six components, and how they impacted June’s result, with the largest positive contributor first:

  • net insufficient inventories (positive),
  • the industrial production construction component (positive),
  • stock prices (positive),
  • the US refiners’ acquisition cost of domestic and imported crude oil (positive),
  • the (inverted) federal funds rate (positive),
  • the (inverted) real exchange rate (negative).

After increasing 1.7% in June, Mexico’s LEI currently stands at 125.7 (2004 = 100), following a 1% and 0.9% jump in April and May consecutively.

During the first half of 2014, Mexico’s LEI rose 1.9%, with four of the six components contributing positively.

Mexico Composite Indexes by Month - June

(Data source: The Conference Board)

Mexico’s Coincident Economic Index (CEI)

All three CEI components contributed positively to June’s result. They are listed below in order, with the strongest positive contributor first:

  • the number of people employed (measured by IMSS beneficiaries) (positive),
  • industrial production (positive),
  • retail sales (positive).

After its 0.3% rise in June, Mexico’s CEI currently stands at 124.6 (2004 = 100). In April and May CEI increased by 0.3% and 0.5% respectively.

In the first half of 2014, Mexico’s CEI rose 1.5%, with all three components contributing positively.

Mexico Composite Indexes six monthly

(Data source: The Conference Board)

Mexican GDP growth picked up in Q2

Second quarter GDP growth accelerated in Mexico, after a lackluster first three months, according to figures published by the National Statistics Institute (INEGI). In the April-June three-month period, the economy grew by 1.04% (4.2% annualized), compared to 0.44% (1.8% annualized) in the previous quarter.

Compared to the first quarter, in the second quarter:

  • industrial production increased 1%,
  • services rose 1.1%,
  • agricultural production climbed 0.9%.

The strong figures were helped by high auto demand in the US and Canada. Mexico is a major supplier of vehicles to the two countries.