PREVIEW-Mexico March industrial output seen up 6 pct yr/yr

WHAT: Mexico March industrial output, February gross fixed

WHEN: Wednesday, May 12, at 9 a.m. (1400 GMT)

REUTERS FORECAST: Median +6.0 percent y/y for industrial
output; -3.3 percent y/y for gross fixed investment.

FACTORS TO WATCH: Mexican industry continues to lead the
economy’s recovery from a deep recession, supported
particularly by a rebound in car exports to the United States.

Data from March will likely show further recovery, although
year-over-year output (MXIPY=ECI: ) probably got a boost from a
calendar effect, so analysts will also pay close attention to
the seasonally adjusted figure (MXIP=ECI: ).

MARKET IMPACT: A much larger-than-expected rise in
industrial output could add pressure on the central bank to
raise interest rates this year.

Policy makers currently expect the economy to underperform
throughout 2010 because of weak consumer demand, but have noted
that total economic output is recovering rapidly. Many analysts
expect interest rates to rise in late 2010.

However, Mexico’s nine-month interest rate swap has dropped
3 basis points in the last two weeks to 5.0458 percent
(MXNIRS9M=RR: ), indicating that investors have cut their bets
slightly for rate hikes.

Mexico statistics agency website for IP data:

All Mexico economic data (ECONALLMX: )

Today’s data (ECONMX: )

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PREVIEW-Mexico March industrial output seen up 6 pct yr/yr