MEXICO CITY, Sept 28 (Reuters) - Mexico's agriculture
sector expanded in July to drive economic activity surprisingly
higher while upticks in the services and industrial sector were
also bright spots for Latin America's second-largest economy.
Economic activity MXIGAE=ECI rose 0.88 percent in July
from the previous month, government statistics institute INEGI
said on Wednesday, more than double analysts' median forecast
in a Reuters poll for a rise of 0.33 percent.
In June, economic activity contracted 0.19 percent, a
revision from the 0.21 percent contraction originally reported.
The pickup in economic activity, as gauged by the INEGI's
IGAE indicator, ran counter to a common view that Mexico's
economy is losing momentum from its 5.4 percent growth last
year.
Global credit worries and uncertain demand from the United
States pushed economists to recently trim their view on Mexican
economic growth this year to 3.81 percent, according to the
median forecast in a central bank poll.
But Wednesday's surprisingly bright activity data could
reassure central bank policy-makers that the economy can
continue to grow without cutting interest rates.
Although retail sales slowed in July from June, industrial
output also rose more than expected, the statistics agency
earlier reported.
Worries about growth had some investors expecting a central
bank rate cut soon but Agustin Carstens, the bank's chief, last
week gave no sign that a cut was imminent.
The fluctuating value of the peso might also give
policymakers pause in cutting rates and investors now see the
central bank on hold until at least mid-2013.
EXPANSION DOUBT
The economic activity data reported Wednesday showed the
volatile agriculture sector expanded by 7.63 percent
month-on-month, the largest gain since a 16.15 percent uptick
in March, while the industrial and services sectors clocked
gains of 0.51 percent and 0.65 percent respectively.
Compared with a year ago, economic activity MXIGDP=ECI
rose 3.74 percent in July, faster than the 3.60 percent
expansion expected by analysts.
While the fresh data is encouraging, economic growth could
still decelerate in the rest of the year, Goldman Sachs
economist Alberto Ramos wrote in a client note.
"We expect activity to soften on the back of weakening
external demand," he wrote.
Mexico's export-driven economy relies on strong demand from
north of the border to keep factories churning and if U.S.
consumers are reluctant to spend, it will hurt Mexico.
Source: www.reuters.com
sector expanded in July to drive economic activity surprisingly
higher while upticks in the services and industrial sector were
also bright spots for Latin America's second-largest economy.
Economic activity MXIGAE=ECI rose 0.88 percent in July
from the previous month, government statistics institute INEGI
said on Wednesday, more than double analysts' median forecast
in a Reuters poll for a rise of 0.33 percent.
In June, economic activity contracted 0.19 percent, a
revision from the 0.21 percent contraction originally reported.
The pickup in economic activity, as gauged by the INEGI's
IGAE indicator, ran counter to a common view that Mexico's
economy is losing momentum from its 5.4 percent growth last
year.
Global credit worries and uncertain demand from the United
States pushed economists to recently trim their view on Mexican
economic growth this year to 3.81 percent, according to the
median forecast in a central bank poll.
But Wednesday's surprisingly bright activity data could
reassure central bank policy-makers that the economy can
continue to grow without cutting interest rates.
Although retail sales slowed in July from June, industrial
output also rose more than expected, the statistics agency
earlier reported.
Worries about growth had some investors expecting a central
bank rate cut soon but Agustin Carstens, the bank's chief, last
week gave no sign that a cut was imminent.
The fluctuating value of the peso might also give
policymakers pause in cutting rates and investors now see the
central bank on hold until at least mid-2013.
EXPANSION DOUBT
The economic activity data reported Wednesday showed the
volatile agriculture sector expanded by 7.63 percent
month-on-month, the largest gain since a 16.15 percent uptick
in March, while the industrial and services sectors clocked
gains of 0.51 percent and 0.65 percent respectively.
Compared with a year ago, economic activity MXIGDP=ECI
rose 3.74 percent in July, faster than the 3.60 percent
expansion expected by analysts.
While the fresh data is encouraging, economic growth could
still decelerate in the rest of the year, Goldman Sachs
economist Alberto Ramos wrote in a client note.
"We expect activity to soften on the back of weakening
external demand," he wrote.
Mexico's export-driven economy relies on strong demand from
north of the border to keep factories churning and if U.S.
consumers are reluctant to spend, it will hurt Mexico.
Source: www.reuters.com
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