CORRECTED-UPDATE 2-Mexico March industrial output contracts most in 3 yrs

Fri May 10, 2013 11:02am EDT

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(Corrects to reflect historic decline, not historic level)

* Industrial output plummets 4.9 pct compared to last year

* Biggest dip since October 2009; manufacturing down 5.8 pct

* Industrial output slumps 0.3 pct month-on-month

* Easter holidays contribute to historic fall-stats agency

MEXICO CITY, May 10 (Reuters) - Mexican industrial output dropped the most in over three years in March compared to a year earlier, pulled down by a strong contraction in manufacturing as Easter holidays cut into production, the national statistics agency said on Friday.

Industrial output shrank 4.9 percent in March from a year earlier, much more than expectations for a 1.4 percent contraction in a Reuters survey.

The annual figure came in below February's revised 1 percent contraction, originally reported as a 1.2 percent contraction, notching the biggest deceleration since October, 2009.

The statistics agency attributed the sharp slowdown to Easter celebrations falling in March this year, which cut down the number of working days. In 2012 the holiday period occurred in April.

The figures followed on the heels of an easing in manufacturing growth in United States, Mexico's chief trading partner.

The pace of U.S. manufacturing growth slowed in April as the sector expanded only modestly, adding to signs the economy cooled as the second quarter got underway.

Manufacturing, which provides the bulk of Mexico's non-oil exports and is a component of the industrial output figures, dropped 5.8 percent compared to last year, its lowest since October 2009.

Among the other components in the index, mining fell 1.5 percent compared with last year, utilities dipped 3.9 percent and construction dropped 5.2 percent versus March 2012.

Solid U.S. demand supported Mexican factories amid sluggish global growth last year, allowing Latin America's No. 2 economy to notch 3.9 percent growth in 2012, but the pace of expansion is seen slowing to 3.5 percent this year.

Higher taxes in the United Sates and the $85 billion in across-the-board U.S. government spending cuts that took effect March 1 may weigh on American demand for Mexican goods.

Compared to the previous month, March industrial activity contracted 0.3 percent, missing expectations in a Reuters poll for a 0.1 percent increase, and down from a downwardly-revised 0.43 percent expansion in February. (Reporting by Alexandra Alper; Editing by Chizu Nomiyama and James Dalgleish)

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