Inegi: Industrial production in Mexico falls to the lowest level in almost a year | Economy

The post-covid rebound loses steam. Industrial activity fell 1.4% in September compared to the previous month and is at the lowest level since October 2020, according to data published this Thursday by the National Institute of Statistics and Geography (Inegi). It is a generalized fall that affects both manufacturing, the engine of the secondary sector, and construction. The decrease occurs in the midst of a shortage of microchips for the manufacture of automobiles and in the midst of an increase in the costs of maritime transport, phenomena derived from the recovery of demand after the worst of the pandemic.

After growing for two consecutive months, the industry fell again, raising doubts about the strength of the rebound. Manufacturing, which includes automotive production, contracted 1.3% in September compared to August; electricity generation, 1.1%; and construction, 1.4%. Only mining reports a minimum monthly increase of 0.1%.

The numbers are not so bad when compared to 2020. From that point of view, industrial activity reports an advance of 1.7% compared to September a year ago. However, this is explained by the historic blow of the pandemic, with a drop of 8.5% in GDP in 2020. Being better than then is not enough to recover production levels before the crisis. According to an analysis by Banco Base, the secondary sector remains 4.5% below its activity in February 2020, just before the outbreak of covid-19.

Regarding the reasons that can explain these falls, Banco Base points to the persistence of “risks in industrial activity related to: the shortage of semiconductors, components and raw materials, the weakening of demand and the rise in the costs of maritime freight and construction materials”. José Luis de la Cruz goes further. “It is not only the problem of semiconductors, what we see is that electricity generation and mining are going down. The electricity part is in a negative vortex, ”he says. “The absence of an industrial strategy by the government is also influencing this.”

The economist predicts that the problems in the industrial sector will continue until early 2022 and puts hope on the pull of the United States, although the strength of its recovery is also in doubt. “For Mexico to recover, it needs manufacturing to start growing through a rebound in the US economy, which is going to be complicated because interest rates can rise due to inflation,” says De la Cruz. In October, the northern neighbor conceded a 6.2% price increase, the worst figure in 30 years.

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