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UPDATE 2-Mexico's economy slows in second quarter
(Recasts; adds analysts' comments, byline)
* Mexico's economy grows 2.8 percent in 2nd quarter
* Holiday-adjusted growth slower than in 1st quarter
* Weaker oil, manufacturing weigh
By Jason Lange and Luis Rojas Mena
MEXICO CITY, Aug 21 (Reuters) - Mexico's economy slowed in the second quarter, hurt by weaker U.S. demand for manufacturing exports and a drop in oil production, the national statistics agency said on Thursday.
The economy expanded at a slower-than-expected 2.8 percent annual rate MXGDPY=ECI in the second quarter, the agency said.
That reading, however, would have been just 2.1 percent when taking into account the Holy Week vacation period, and considerably lower than the holiday-adjusted rate of 3.7 percent in the first quarter, the agency said.
"The slowdown in the United States is showing strongly, above all in industry," said Cecilia Posadas, an analyst at BBVA's Mexican subsidiary.
A Reuters poll of experts had predicted the annual economic growth rate would be 3.20 percent in the second quarter.
Mexico sends about 80 percent of its exports to the United States, and the government expects the U.S. slowdown will chill economic growth this year to 2.8 percent from 3.2 percent in 2007.
At the same time, oil output has also been slipping in Mexico. That is turning into a significant drag for the economy, Goldman Sachs economist Alberto Ramos said in a note to clients.
Production in the mining sector, where oil output is the most important component, plunged 9.1 percent during the second quarter from a year earlier, the statistics agency said. Mexico is the world's No. 6 producer of crude but its largest oil field is declining quickly.
Holy Week of the Easter season, a five-day holiday for many employees in Mexico, fell in March this year, trimming the number of working days in the first quarter compared to a year ago when the holiday was in April.
The statistics agency also said the economy expanded 0.16 percent in the second quarter over the first quarter of 2008 MXGDPQ=ECI.
The industrial sector expanded 1.3 percent, with the manufacturing sector rising 3.7 percent. Retail and services grew 3.5 percent in the quarter. Agriculture was up 4.4 percent. All of these figures were inflated by the holiday effect.
The unadjusted figure for growth during the first quarter was 2.6 percent.
