Mexico's Industrial Production Slows to Weakest in Five Months

  • Oil activity falls as Pemex heads for 11th year of decline
  • Manufacturing decelerates along with U.S. industrial slowdown

Mexico’s industrial production grew in October at the slowest pace in five months as the oil sector shrank and manufacturing cooled.

Total output climbed 0.5 percent in October from a year earlier, the national statistics institute said on its website Friday, the lowest advance since May and less than the 1 percent median forecast of 20 analysts surveyed by Bloomberg. Industrial production fell 0.1 percent from the previous month, the first such decline in five months.

Declining oil output has weighed on the Mexican economy over the past year, prompting economists to cut their 2015 growth forecasts by more than a percentage point, a central bank survey showed Dec. 1. 

Manufacturing also cooled in October in line with U.S. industrial production, which posted its smallest annual gain since 2009. The United States is the destination of about 80 percent of Mexico’s exports.

“Mexico faces the same headwinds affecting the U.S. economy,” Bill Adams, an economist at PNC Financial Services Group in Pittsburgh, said in a note to clients. “Low commodity prices have hit mining and heavy industry hard, but consumer spending is supporting auto manufacturers and services sector activity.”

Manufacturing activity in Latin America’s second-largest economy rose 1.2 percent in October from a year earlier, missing analysts’ estimates of a 1.8 percent gain and lower than the 3.6 percent pace recorded in September. 

Oil activity dropped 3 percent as state-owned oil monopoly Petroleos Mexicanos nears its 11th straight year of declining production. Construction output increased 2.2 percent and utilities advanced 4.5 percent, the statistics institute said in a statement.

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