Nov. 20 (Bloomberg) -- Mexico’s economy contracted less than analysts forecast in the third quarter and expanded from the previous three months, signaling an end to the recession.

Gross domestic product, the broadest measure of a country’s output of goods and services, shrank 6.2 percent from a year earlier and rose 2.9 percent from the second quarter. Analysts had expected a 6.7 percent decline on the year, according to the median estimate of 17 economists surveyed by Bloomberg.

Mexico had been hobbled by the slowdown in the U.S., the destination for 80 percent of its exports. Latin America’s second-largest economy got a boost in the third quarter as the recovery in the U.S. increased demand for televisions and car parts, aiding the manufacturing industry, said Luis Flores, senior economist at IXE Grupo Financiero SA in Mexico City.

“The recession is coming to an end,” Flores said in a telephone interview. “The recovery will depend on the U.S. and the export sector.”

The Mexican currency declined 0.1 percent to 13.0704 per U.S. dollar at 4:49 p.m. New York time, from 13.0576 yesterday.

Service industries including transportation and tourism contracted 6.5 percent from a year earlier and grew 4 percent from last quarter, the national statistics agency said in a statement. Manufacturing sank 9.9 percent from a year earlier, the smallest annual decline this year, Flores said.

Mexican President Felipe Calderon said Nov. 5 at the Bloomberg Economic Forum in Mexico City that five consecutive months of gains in formal employment through October herald the end of the economy’s biggest contraction since the Great Depression. The credit crisis a year ago interrupted Mexico’s longest stretch of growth in more than a decade.

‘Positive Surprise’

“This supports Calderon’s point of view,” Sergio Luna, chief economist at Citigroup Inc.’s Banamex, said about the third-quarter GDP report. “It was a positive surprise.”

Luna said the recovery in manufacturing was also evident in a report last week that industrial production fell 5.7 percent, less than the 6.2 percent drop forecast by economists.

A rebound in U.S. auto sales is spurring sales at Mexican auto-parts makers Alfa SAB and Grupo Kuo SAB. Demand for Alfa’s engine heads rose 16 percent in the third quarter from the previous three months, while overall sales at Kuo rose 8.6 percent from the second quarter.

Higher consumer spending helped increase third-quarter beer shipments by 7 percent at Grupo Modelo SA, which makes Corona, and 1.5 percent at Fomento Economico Mexicano SAB, brewer of Tecate and Sol.

America Movil

America Movil SAB, Latin America’s largest mobile-phone company, said third quarter profit rose 51 percent as the company added 318,000 new Mexican subscribers on long-term plans in the three-month period.

The central bank may wait until the third quarter of next year to raise the benchmark interest rate, Flores said. The bank is forecast to keep the rate unchanged at 4.5 percent in its final decision of the year next week, according to a Bloomberg survey.

“Other countries are raising rates because internal demand is up,” Flores said. “In Mexico, that’s not happening.”

Annual economic growth in Mexico averaged 2.4 percent over the past eight years, according to the International Monetary Fund. Meanwhile, Brazil posted average growth of 3.7 percent.

Mexico may grow 3 percent next year, the government says.

The country’s weak economy has hurt the peso, making it the second-worst performer among six Latin America currencies this year. The peso has advanced 4.6 percent in 2009, compared with 34 percent for Brazil’s real.

Finance Minister Agustin Carstens said in an interview earlier this month that he sees a “good chance” Mexico’s economy will grow more than 5 percent annually by 2012.

To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net;

Last Updated: November 20, 2009 17:08 EST