CORRECTED-UPDATE 1-Mexico December industrial output slumps most since 2009

Mon Feb 11, 2013 9:58am EST

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(Corrects construction drop in paragraph four to 2.67 percent, not 3.96 percent)

* December industrial output falls 2.1 percent vs November

* Manufacturing dips, construction falls sharply

MEXICO CITY, Feb 11 (Reuters) - Mexican industrial production slumped in December by the most since a deep recession four years ago as factories slowed and construction activity fell sharply in Latin America's second biggest economy.

Industrial output fell 2.1 percent in December compared to the previous month, its biggest drop since May 2009, when Mexican factories were dragged down by a U.S. recession. Mexico sends most of its exports to its northern neighbor.

The data was below a 0.2 percent rate of expansion seen in a Reuters poll and the upwardly revised 1.28 percent month-on-month rate posted in November.

Among industrial components, manufacturing contracted 1.07 percent in December from the previous month. Construction slid for its third month in a row, down 2.67 percent compared with November, while mining and utilities output also slipped.

Solid U.S. demand has helped support Mexican factories amid sluggish global growth. Mexico's economy is seen slowing from an around 4 percent annual rate in 2012 to 3.5 percent in 2013.

Mexico's central bank has said it could lower borrowing costs if inflation continues to cool and economic growth slows. The market is betting on an at least 25 basis point cut this year to the country's 4.50 percent benchmark rate.

Compared with December 2011, overall industrial output dropped 1.1 percent, missing expectations for a 2.0 percent rise and worse than November's upwardly revised 2.9 percent expansion. (Reporting By Michael O'Boyle)

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