June 25, 2013 / 1:36 PM / in 4 years

UPDATE 1-Mexican economy in April shrinks most in four months

* Economic growth contracts 0.77 percent month-on-month
    * Sharpest contraction since Dec on weak services, industry
    * Annual figure notches strongest expansion since July


    MEXICO CITY, June 25 (Reuters) - Mexico's economy contracted
in April by the most in four months compared to March, on
weakness in services and industry, signaling more headwinds for
Latin America's no. 2 economy. 
   Mexico's monthly gross domestic product proxy 
shrunk by 0.77 percent in April compared with the prior month,
when it grew at a downwardly revised 0.16 percent rate. April's
contraction was the strongest since December, 2012.  
   Industry posted a 1.67 percent month-on-month decline, below
March's 0.39 percent contraction, while the services sector
shrunk by 0.57 percent from a 0.92 percent expansion in the
previous month. 
    But on an annual basis, economic activity shot
up 4.55 percent in the 12 months through April, its fastest pace
since July, 2012. The figure was well above March's upwardly
revised 1.7 percent annual contraction. 
    The annual rate was helped by Easter, which was celebrated
in March this year but in April last year, leading to a greater
number of working days in April in 2013, the statistics agency
said. 
    Mexico's annual economic growth slumped in the first quarter
to its weakest in three years, prompting the government to cut
growth estimates to 3.1 percent for the year, down from last
year's 3.9 percent rate. 
    Data earlier this month showed Mexican industrial output
dropped in April by the most in four months, while retail sales
also slipped, reinforcing the dreary economic outlook.
  
    Markets have priced out further interest rate cuts since the
central bank's March cut to a record low, as expectations mount
for the U.S. Federal Reserve to rein in stimulus, which may
weaken the peso further and push up import prices.

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