CORRECTED-UPDATE 2-Mexico Oct industrial output falls more than expected
(Corrects third bullet point from March to May) * Industrial output -0.9 pct vs poll -0.25 percent * Construction, manufacturing activity drop * Biggest monthly fall since May MEXICO CITY, Dec 12 (Reuters) - Mexico's industrial output fell more than expected in October as the global slowdown dragged on a key sector in Latin America's No. 2 economy and bolstered expectations of slowing growth towards the end of the year. Industrial production fell 0.9 percent in October, seasonally adjusted, from a downwardly-revised 0.6 percent expansion in September, according to data released by the national statistics agency on Wednesday. October's contraction was more severe than expected. Analysts polled by Reuters forecast, on average, a decline of 0.25 percent. The steepest fall was in construction, down 1.2 percent, but the bigger manufacturing sector - which accounts for almost 20 percent of Mexico's total economic output - also fell, down 0.9 percent, its fourth contraction this year. Mining and utilities activity rose. Analysts said the latest figures were unlikely to prompt an interest rate change from the current 4.5 percent benchmark, as the central bank juggles concerns about lagging growth with inflation that is easing but has remained stuck above the bank's 4 percent ceiling for 6 months. "The numbers coming out definitely keep them comfortable with where they are right now," Standard Chartered economist Italo Lombardi said. "The three-month moving average (of industrial production), which is more of an indication of the trend, has weakened going into the fourth quarter and that is in line with the more dovish tone from the central bank." Compared with October 2011, output rose 3.6 percent, in line with expectations and better than the downwardly-revised 2.3 percent expansion in September. The contraction was in line with an unexpected slowdown in the United States, where manufacturing activity fell in October as superstorm Sandy disrupted production. Mexico sends nearly 80 percent of its exports to the United States, and its factories operate nearly in lock step with their counterparts north of the border. Although increases in Mexican auto production and exports in November should buoy activity south of the border, economists generally expect growth to ease in the last months of 2012, and into 2013. The government expects 3.9 percent growth this year, slowing to 3.5 percent in 2013. (Reporting by Krista Hughes; editing by John Wallace and Sofina Mirza-Reid)
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