WRAPUP 1-Mexico industrial production slips in October

* Month-over-month industrial output falls 0.29 pct in Oct

* Industrial output rises 3.7 pct yr/yr, lags expectations

* Auto production climbs 17.5 pct in Nov. from year-ago

By Patrick Rucker and Michael O’Boyle

MEXICO CITY, Dec 13 (BestGrowthStock) – Mexican industrial output
fell in October, marking the first month-on-month contraction
after three months of expansion or stagnation,

November auto data released separately on Monday showed a
sharp rise from the prior year, but a slight slowdown in the
production of light vehicles from October raised concerns.

The auto sector, a key part of Mexico’s manufacturing base,
is bracing for slack foreign demand as Latin America’s
second-largest economy struggles to sustain its recovery.

Industrial production fell 0.29 percent in October from
September (MXIP=ECI: ), while on a year-over-year basis output
rose less than expected Mexico’s national statistic agency
reported.

Mexico’s impressive economic recovery witnessed early this
year seems to have tapered, analysts at local brokerage IXE
said.

“Manufacturing continues to grow, but at a lower rate than
the 6.5 percent expansion seen in the first half of the year,”
IXE said in a research note. It predicted that industrial
output will expand by a 2 percent annual rate through the first
half of 2011.

Non-manufacturing components of Mexico’s industrial output
data — mining, construction and utility infrastructure — have
been uneven through 2010 while manufacturing enjoyed a spurt
early in the year before moderating.

All areas of industrial activity dropped on a
seasonally-adjusted basis in October, helping to explain the
disappointing 3.7 percent year-over-year (MXIPY=ECI: ) expansion.
Economists polled by Reuters expected a 5.30 percent rise.

In the face of weakening growth next year, most economists
expect the Mexican central bank to hold its benchmark lending
rate steady through 2011 and raise it in early 2012.

Mexico’s economy is expected to grow about 5 percent this
year after contracting 6.1 percent in 2009. Growth is expected
to slow next year, though, with analysts expecting 3.5 percent
expansion.

AUTO OUTPUT SPUTTERS

Auto production has driven Mexico’s manufacturing-led
rebound so far. Auto output in November rose 17.5 percent from
year-ago levels, the national auto manufacturer association
said.

But production of light vehicles was slightly lower than in
October and producers are worried that overseas demand could
flag next year.

“With the U.S. unemployment rate so high, we have to be
cautious,” said Eduardo Solis, the head of the local auto trade
group. “The outlook is uncertain.”

While economic growth will certainly weaken next year,
Credit Suisse economist Alonso Cervera said the consensus
forecasts are too bleak.

“Growth will surprise on the upside,” he said, forecasting
expansion of 4 percent next year.

The statistics institute publishes a Spanish-language table
on seasonally adjusted industrial output at:
http://dgcnesyp.inegi.org.mx/cgi-win/bdiecoy.exe/486?s=est&c=23954
(Additional reporting by Luis Rojas Mena; Editing by Leslie
Adler)

WRAPUP 1-Mexico industrial production slips in October