Mexico’s economy expanded at an annualized rate of 1.1 percent in first quarter 2014, an improvement from 0.5 percent growth in 2013. Recent data are consistent with a pickup in activity. Industrial production, employment, exports, and retail sales all grew. Inflation held steady, and the peso gained ground against the dollar in May for the third consecutive month.
Output Grows
Mexico’s economy grew 1.1 percent in the first quarter on a quarter-over-quarter basis (Chart 1). Service-related activities (including trade, transportation and business services) grew 0.8 percent, while goods-producing industries (including manufacturing, construction, utilities and mining) grew 0.3 percent. Agricultural output contracted 0.1 percent in the first quarter. First-quarter growth was below analysts’ expectations, and the consensus forecast for 2014 was revised down from 3.1 percent in April to 2.8 percent in May.
Exports Improve
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Exports grew 1.8 percent in April after declining 1.1 percent in March. Three-month moving averages reveal a systematic decline in oil exports, while total exports show improvement since the beginning of the year (Chart 2). Year to date, total exports have grown 2 percent with manufacturing exports growing 4.3 percent. Oil exports have declined 13 percent during the first four months of 2014.
Industrial Production Improving
Mexico’s industrial production (IP) grew 0.6 percent month over month in April after growing 0.2 percent in March. Three-month moving averages show a pickup in total IP—which also includes construction, oil and gas extraction and utilities—and manufacturing IP saw a sharp increase (Chart 3). Meanwhile, U.S. IP grew 0.7 percent in May after falling 0.3 percent in April. Mexico’s industrial production typically tracks U.S. industrial production, due in part to the U.S. automotive industry’s large presence in Mexico.
