(Adds quotes from economist, Ford manager; adds byline)
By Jason Lange
MEXICO CITY Nov 11 Mexican industrial output
shrunk in September at the slowest annual rate since late last
year, a fresh sign that Mexico's economy is recovering from a
Output MXIPY=ECI dropped 5.7 percent compared with
September 2009, the national statistics agency said on
Wednesday. That was more moderate than the 6.5 percent decline
forecast by analysts.
Mexico's economy nosedived early in the year as the U.S.
recession choked off demand for cars, refrigerators and other
goods made south of the border.
However, the rate of decline has been easing in recent
months. In further evidence of a rebound, industrial output
MXIP=ECI edged up 0.15 percent in September from August.
"This suggests that the second half of the year is likely
to show an improvement compared to the horrible first half,"
said Bertrand Delgado, en economist at RGE Monitor in New
Orders from the United States have risen slightly in the
last few months for the turnstiles and other security goods
made at Mexican firm CIDET's factory just north of the capital,
though sales are still below where they were this time last
"We don't have any new clients, but our regulars have made
slightly bigger orders recently," said Agustin Alfonseca, who
is in charge of distribution at CIDET.
Mexico's economy entered recession in mid-2008 as the
factory slowdown fueled an upward spike in unemployment that
led Mexico's consumers to cut back on retail purchases.
After several months of double-digit declines earlier in
the year, September's fall in industrial output was the most
moderate since November 2008.
Mexico's economy is expected to contract 7.2 percent in
2009, according to a recent central bank poll of economists.
That would mark the country's steepest economic contraction
The central bank thinks Mexico climbed out of recession in
the third quarter on higher U.S. demand for exports. The bank
forecasts growth of about 3 percent in the July-September
period from the previous quarter.
Economists, however, think some of that growth was likely
derived from a surge in the auto industry after the U.S.
government gave Americans cash incentives to buy new cars. Some
of the gains in sales registered in recent months could lead to
lower demand from U.S. consumers later in the year, they say.
Mexico is one of the world's leading car manufacturers and
its auto output has risen for four straight months through
October, though production remains well below last year's
George Pipas, sales analysis manager for Ford Motor Co
(F.N) in Dearborn, Michigan, said output at the U.S.
automaker's Mexican plants appears to have turned a corner,
though a sustained rebound will need healthy U.S. consumer
"We expect to see a modest recovery," he said. "But heck,
it depends on the U.S. economy."
Ford, nonetheless, is still investing in Mexico. The
company plans to open a diesel engine plant next week in the
northern Mexican state of Chihuahua.
In a separate report, the statistics agency said Mexico's
gross fixed investment, a measure of spending on machinery,
equipment and construction, slid 11.2 percent in August from
the year-ago period.
Analysts had predicted a decline of 12.1 percent, according
to the median of a Reuters poll.
(Additional reporting by Michael O'Boyle and Mica Rosenberg;
Editing by Kenneth Barry)