MEXICO – May’s Industrial production expanded slightly

Manufacturing output is likely still affected by the global semiconductor supply shortage

Julio Ruiz


Annual growth in May’s industrial production (IP) reflects a favorable base effect (strict social distancing measures a year ago). IP grew 36.4% year over year in May, below our forecast of 38.2% and broadly in line with market expectations of 36.7% (as per Bloomberg). According to figures adjusted by working days, IP expanded at a similar pace (36.4% year over year) and taking the quarterly annual rate to 22.0% in May (from -1.8% in 1Q21). Looking at the breakdown, construction and manufacturing output quarterly annual rate stood at 23.3% in May (from -6.7% in 1Q21) and 30.7% (from 0.5%), respectively, while mining output stood at 3.8% (from -1.7%).

At the margin, industrial production expanded slightly in May. Using seasonally adjusted figures, IP expanded 0.1% month over month, supported by construction output (2.0%), while manufacturing output fell by 0.7%. We note manufacturing output was dragged by vehicle industry related sectors (computer & related: -2.6% and transport equipment: -2.9%) likely still affected by the global semiconductor supply shortage. The quarter-over-quarter annualized growth rate (qoq/saar) of IP stood at 3.6% in May, while manufacturing and construction output stood at 2.6% and 14.3%, respectively.

We expect GDP growth of 6.5% for 2021, helped by external demand (strong U.S. growth). The service sector will also support the economic recovery this year, contingent on progress of the vaccination campaign (helping to keep hospitalizations contained).

Julio Ruiz