Itaú BBA - MEXICO – Industrial production posted a solid sequential growth in November

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MEXICO – Industrial production posted a solid sequential growth in November

January 11, 2021

Industrial production growth was driven by construction output

Industrial production (IP) stood at -3.7% year-over-year in November, above our forecast and market expectations of -4.2% (as per Bloomberg). According to figures adjusted by working days, IP contracted at a slower pace (-3.0% year-over-year), taking the quarterly annual rate to -4.4% in November (from -8.8% in 3Q20). Construction and manufacturing output recovered further, falling by 11.3% year-over-year in the quarter ended in November (from -17.8% in 3Q20) and -2.2% (from -7.1%), respectively, while mining stood at -2.0% (from -3.2%).

Industrial production sequential expansion in November was driven mainly by the construction sector. Using seasonally adjusted figures, IP posted a solid monthly growth rate of 1.1% month over month in November (from 1.78% in October), driven mainly by construction output (2.2%), while manufacturing output (0.1%) stood almost flat. Industrial production is now 3.4% below pre-outbreak (February) levels. Given the weak base of comparison, the quarter-over-quarter annualized growth rate (qoq/saar) of IP stood at 30.2% in November, supported mainly by manufacturing output (34.0%) and construction sector (28.1%), while mining output stood at 10.2%.

The November’s figures highlight upside risks to our GDP forecast of -9.0% for 2020. While the re-tightening of social distancing measures (mainly in Mexico City and the state of Mexico) in the last two weeks of December will likely have a negative impact in activity through services sector in the last month of the year, improved activity figures in October and November (mainly in the industrial output) more than offset the expected negative impact.

Julio Ruiz

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