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CORRECTED-UPDATE 2-Mexico Oct industrial output falls more than expected
December 12, 2012 / 2:30 PM / 5 years ago

CORRECTED-UPDATE 2-Mexico Oct industrial output falls more than expected

(Corrects third bullet point from March to May)
    * Industrial output -0.9 pct vs poll -0.25 percent
    * Construction, manufacturing activity drop
    * Biggest monthly fall since May

    MEXICO CITY, Dec 12 (Reuters) - Mexico's industrial output
fell more than expected in October as the global slowdown
dragged on a key sector in Latin America's No. 2 economy and
bolstered expectations of slowing growth towards the end of the
year. 
    Industrial production fell 0.9 percent in
October, seasonally adjusted, from a downwardly-revised 0.6
percent expansion in September, according to data released by
the national statistics agency on Wednesday.  
    October's contraction was more severe than expected. 
Analysts polled by Reuters forecast, on average, a decline of
0.25 percent.
    The steepest fall was in construction, down 1.2 percent, but
the bigger manufacturing sector - which accounts for almost 20
percent of Mexico's total economic output - also fell, down 0.9
percent, its fourth contraction this year. Mining and utilities
activity rose.
    
    Analysts said the latest figures were unlikely to prompt an
interest rate change from the current 4.5 percent benchmark, as
the central bank juggles concerns about lagging growth with
inflation that is easing but has remained stuck above the bank's
4 percent ceiling for 6 months. 
    "The numbers coming out definitely keep them comfortable
with where they are right now," Standard Chartered economist
Italo Lombardi said.
    "The three-month moving average (of industrial production),
which is more of an indication of the trend, has weakened going
into the fourth quarter and that is in line with the more dovish
tone from the central bank." 
    Compared with October 2011, output rose 3.6
percent, in line with expectations and better than the
downwardly-revised 2.3 percent expansion in September.
    The contraction was in line with an unexpected slowdown in
the United States, where manufacturing activity fell in October
as superstorm Sandy disrupted production. 
    Mexico sends nearly 80 percent of its exports to the United
States, and its factories operate nearly in lock step with their
counterparts north of the border.
    Although increases in Mexican auto production and exports in
November should buoy activity south of the border, economists
generally expect growth to ease in the last months of 2012, and
into 2013. 
    The government expects 3.9 percent growth this year, slowing
to 3.5 percent in 2013.

 (Reporting by Krista Hughes; editing by John Wallace and Sofina
Mirza-Reid)

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