The Mexican economy is closely tied to that of the U.S., given that the country is the major market for Mexico's exports. So it is not surprising that Mexico's recovery has been a bit slower than expected. However, several macro indicators show the Mexican economy is well on its way to full vitality. This is good news for companies that are considering expanding to Mexico or those that are already engaged in manufacturing in Mexico.
Industrial production on the rise
Manufacturing in Mexico has increased three months in a row, according to Market Realist using data from Mexico's National Institute of Statistics, or INEGI. Month-over-month, it increased 0.4 percent in July. Automotive exports also rose sharply in August, which is a reliable indicator, as car manufacturing is one of the largest sectors of production in Mexico. All of this points to a manufacturing industry in the country that is ready to expand. American companies should consider taking advantage of this trend to reduce manufacturing costs by establishing centers of production in Mexico.
Other important facts
Inflation in Mexico was lower than analysts expected it to be in August, and is likely to remain steady at this low rate. Unemployment in the country dropped in August to 5.2 percent, a year-over-year decrease of 0.2 percent. Urban unemployment also dropped, which some consider a more reliable indicator of Mexico's labor health. Furthermore, retail sales increased for the third month in a row in July, driven by automotive sales. As manufacturers seek to expand into Mexico not only as a center of production but also as a consumer market, this news from Market Realist using data from INEGI is encouraging.
Total exports from Mexico increased for the third consecutive month as well, according to statistics from INEGI. The industrial and manufacturing sectors make up a large portion of Mexican economic activity, meaning improvement in this area benefits the country as a whole.
Mexico's growth has been noted by analysts, who believe that the middle-term outlook for the market is positive.
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