MEXICO CITY (Reuters) – Mexican industrial output fell month-on-month for the first time in 11 months in April, even as activity rose by a record margin from the previous year thanks to a rebound from a pandemic-induced contraction in 2020, official data showed on Friday.
Compared with March, industrial output dropped 0.2% in seasonally adjusted terms as expansion in the mining sector was offset by declines in manufacturing, construction and energy, data published by national statistics office INEGI showed.
“Supply-chain frictions, cost-push pressures, lingering policy uncertainty, weak business confidence, and slow progress with the vaccination program are likely to weigh on the broad industrial sector for a while despite firmer external demand,” said Goldman Sachs economist Alberto Ramos.
The latest IHS Markit Mexico Manufacturing Purchasing Managers’ Index showed factory activity shrinking for the 15th straight month in May due to subdued sales, raw material shortages and the COVID-19 crisis. Still, the rate of decline was the second-slowest since the pandemic hit.
In annual terms, output posted its largest jump in over 2-1/2 decades in April, rising by 35.7% in adjusted terms and by 36.6% in unadjusted terms. Both increases were the biggest registered in INEGI’s online data bank, which extends back to 1994.
Industrial output hit bottom in May 2020 and has recovered as the economy gradually reopens, mobility increases, businesses adjust and external demand firms, said Goldman’s Ramos, who anticipated “significant positive spillovers from U.S. growth.”
The economy shrank by some 8.5% last year, the sharpest slump since the 1930s. Mexico is expected to recoup much of that in 2021, for which the government is forecasting 6.5% growth.
(Writing by Dave Graham and Anthony Esposito; Editing by Steve Orlofsky)