Industrial production (IP) fell by 1.3% YoY in February, a milder contraction than Bloomberg’s market consensus of -3.5% and our forecast of -4.2%. Within the annual figures, construction was the positive surprise and contributed to the lower contraction with a growth of 0.4%, while mining (-9.2%), manufacturing (-0.3%), and utilities (-1.2%) continued to decrease.
Using seasonally adjusted figures, IP increased by 2.5% MoM, following two months of contractions, and surprised positively compared to INEGI’s nowcast of +0.2% MoM. This performance was driven by construction (+2.8%, benefiting from building construction), manufacturing (+2.9% MoM, with 19 out of 21 subsectors increasing), and mining (+0.8%, with metal and oil mining offsetting contractions in services). Momentum in the industrial sector remained weak in February, with the QoQ/SAAR at -6.2%, from -7.3% in January.
Our take: The positive performance of today’s IP print couldn’t offset January’s underperformance and showed volatility within the figures. Overall, results have a negative bias for the first quarter, with the QoQ/SAAR at -6.2%. Looking ahead, we continue to expect that shifts in US trade policy will generate distortions in manufacturing exports, such as temporary inventory accumulation and a reorganization of supply chains. Additionally, high uncertainty is likely to be reflected in low levels of private investment in Mexico, which should imply weak private construction and manufacturing ahead. The government is focused on strengthening domestic activity amid changes in the global outlook, which might modestly drive public construction in the second semester of 2025.
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