Mexico's economy stalled in November as agriculture, industrial activity contracted, surprising analysts, who had been expecting 0.8% growth and fifth straight month of expansion; economic production fell 0.04% versus a year ago

Cindy Allen

January 27, 2014 (Bloomberg LP) – Mexico’s economy stalled in November as agriculture and industrial activity contracted, surprising analysts who expected a fifth straight month of expansion.

Economic production, as measured by the IGAE indicator, fell 0.04 percent from a year earlier, compared with the median 0.8 percent growth estimate of 20 analysts surveyed by Bloomberg. Farm output fell 3.81 percent, while services increased 0.99 percent, according to the nation’s statistics agency, known as Inegi.

The stagnation adds to signs the economy failed to rebound toward the end of last year and follows a report that showed industrial production shrank 1.4 percent in November, four times more than analysts forecast. Growth will accelerate to 3.42 percent this year from 1.28 percent in 2013 as government spending increases and U.S. demand grows, according to the median forecast in a Bloomberg survey.

“By far the mixed data coming out have been biased toward a slow recovery,” Tanuja Gupta, an analyst with Nomura Holdings Inc. in New York, wrote in an e-mailed research report. “There should start to be much clearer signs of a strong pickup once the data for January start coming in.”

A separate report today showed a trade surplus of $1.66 billion for December, two times wider than the $820 million median forecast of analysts surveyed by Bloomberg.

Growth last year was held back by sluggish public spending due to the transition to a new presidential administration in December 2012 and lower U.S. demand for exports, Finance Minister Luis Videgaray said in a speech in Mexico City on Jan. 10. The economy should rebound to grow 3.9 percent this year amid more efficient government spending and as stronger U.S. growth lifts sales by Mexican exporters, Videgaray said.

--With assistance from Daniel Grillo and Dominic carey in Sao Paulo. Editors: Andre Soliani, Randall Woods

To contact the reporter on this story: Eric Martin in Mexico City at emartin21@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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