Macro watch: Mexico industrial production, Peru rate cut
Disasters hit Mexican industrial production in September
Mexico's statistics agency Inegi reported a 0.4% month-on-month decline in industrial production in September (seasonally adjusted), impaired chiefly by a 15.1% annual decline in the mining sector.
In a note to investors, Banorte-IXE said the slump in mining was due to "the decrease in oil production in the Gulf of Mexico resulting from the hurricane season and the 8.2-degree earthquake on September 7 that affected the refining capacity in Salina Cruz, Oaxaca." Inegi includes oil in the mining category.
The bank, which had forecast a 0.5% decline, added, "Given the particular case of hurricanes, we stress the impact that Harvey and Katia had on refining capacity, which is why [federal oil company] Pemex had to reduce oil production, given that inventories were already at maximum levels."
Pictured: Locals stand in the corner of a flooded street following the overflow of the Tecolutla river the day after the passage of Hurricane Katia in Veracruz state on September 9.
Manufacturing saw a 0.1% seasonally adjusted decline in industrial production but a 3.4% year-on-year rise while that of construction increased 0.8% month-on-month and was unchanged year-on-year. The civil engineering segment saw a 7% decline as many public infrastructure projects were put on hold in the wake of the September 7 and 19 earthquakes.
The quakes stand to generate a surge in all areas of construction assuming a relatively smooth rollout of government reconstruction funds and tender processes.
Peru central bank cuts rate
Peru's central bank cut the country's benchmark rate to 3.25% from 3.50% at its November 9 meeting, citing the sustained drop in the CPI and below-potential GDP growth.
The bank said October inflation was negative 0.47%, bringing the annualized rate to 2.04%. The bank sees the CPI remaining within the target range of 1-3% through 2017 and 2018, tracking lower in the annual comparison for the coming months.
"Growth in economic activity has been recovering quickly, even though it remains below its potential growth in the context of low inflation," read the announcement, adding indicators and private sector forecasts continued to improve in October.
The bank also stressed the gradual recovery in the global economy, but warned of the eventual reversal of monetary stimulus policies in advanced economies.
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News in: Political Risk & Macro (Peru)
Peruvian GDP fell 0.55% in 2023
In December 2023, productive activity contracted by 0.74%
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