WRAPUP 2-Mexico factory output jumps; auto exports surge

* Mexico March industrial output +7.6 pct yr/yr

* April auto exports +56.7 pct yr/yr
(Adds detail on Volkswagen production, rate view and byline)

By Michael O’Boyle and Patrick Rucker

MEXICO CITY, May 12 (BestGrowthStock) – Mexico’s industrial
production rose at a surprisingly fast pace in March and auto
exports surged in April in a sign growth is accelerating in
Latin America’s second largest economy.

Industrial production, which accounts for 40 percent of the
economy, rose a larger-than-expected 7.6 percent in March from
a year earlier (MXIPY=ECI: ), the national statistics agency said
on Wednesday. Analysts had expected a 6.0 percent increase.

Output rose 0.85 percent from the previous month
(MXIP=ECI: ).

Mexico’s economy contracted 6.5 percent is 2009, its worst
decline since 1932, due to a plunge in exports to the
recession-stricken United States.

That led to Mexico’s worst economic contraction since 1932
as the economy shrank 6.5 percent in 2009.

With U.S. demand picking up, so is Mexico’s economy, and
factories that make cars for export have been powering the
country’s recovery. The government expects the economy will
grow 4.1 percent is 2010.

Mexican car production rose 69.6 percent in April 2010 from
a year earlier, and exports were up 56.7 percent, the country’s
national auto association said on Wednesday.

German automaker Volkswagen (VOWG_p.DE: ) recently hired new
workers in Mexico as it plans to launch a new compact model
built at a factory east of the Mexican capital. The model,
still to be named, will be launched later this year.

Volkswagen expects output at its Mexican plant, which
exports much of its production to the United States, to rise 25
percent this year, said spokeswoman Consuelo Minutti.

Overall Mexican exports were hurt last year when the
government forced factories to temporarily shut down in late
April and early May due to the H1N1 flu scare, slowing much of
Mexico’s economy.

As Mexico’s recovery builds steam, many economists see the
central bank raising interest rates late this year. Consumer
spending has lagged Mexico’s export growth. That is dulling
overall economic recovery and keeping inflation in check.

While most output from Mexican car factories is for export,
consumer weakness has put the brake on overall sales.

“The surprise has been the shrinking of the Mexican (car)
market,” said Minutti.

Investment has also lagged. Gross fixed investment
(MXGFI=ECI: ), a measure of spending on machinery, equipment and
construction, fell 2.3 percent in February from a year
earlier.

Investing Basics

(Writing by Jason Lange, additional reporting by Luis
Rojas; Editing by Andrew Hay)

WRAPUP 2-Mexico factory output jumps; auto exports surge