industrial production

A glimmer of light at the end of a (long) tunnel? Mexico’s industrial production tip-toed up 0.6 per cent in April compared with March.

Now, it wasn’t a very big increase, but it was some welcome good news to an economy where the central bank, cutting interest rates in a shock move last week, cautioned that even the disappointing new expectations of growth for this year (the bank is predicting 2.2-3.3 per cent; the government 2.7) are unlikely to be met. 

It had, it turns out, been too good to be true. After a positive start to the year, Brazil’s industrial production fell by 0.5 per cent in March from February and by 0.9 per cent in comparison with March 2013, national statistics agency IBGE said on Wednesday.

The figures will add to the gloom in Brasília, after the central bank’s weekly survey of market economists on Monday showed the consensus on GDP growth during 2015 falling below 2 per cent for the first time, to 1.91 per cent. The outlook for this year is a marginally more dismal 1.63 per cent.

Brazil’s growth story, it seems, is failing to produce any happy endings. 

Last week, data showed that the renminbi had overtaken the euro in the world of trade finance, something we thought looked a little out of place with real trade settlement.

On Tuesday, a fresh sign of fishiness appeared, after Chinese industrial production came in below expectations. 

Mexico may be all the rage among investors. But praise the country in polite Mexican society and you risk running a gauntlet of abuse. John Authers, the FT’s investment columnist and a former Mexico bureau chief, describes the situation very well.

Certainly, President Pena Nieto’s reform agenda gets high marks for concept but low marks for delivery. Of his four biggest initiatives, the detail of telecom reform is still being worked out; ditto education; the fiscal reform was disappointing; and we don’t yet know the full shape of the energy reform. No wonder the understandable scepticism, then, of much local conversation – even if the intensity of that conversation has meant missing another problem that has not won the discussion it deserves. 

South Korea’s industrial output hit a nine-month high, adding to investor confidence in the country’s recovery. But not everything is rosy about Asia’s fourth-largest economy amid growing concerns over corporate financing problems. 

South Korea’s new president Park Geun-hye is full of promises to boost the services sector, but for now her government is relying on powerful manufacturers to help fulfil her growth promises. And they are proving reluctant to throw everything they have at the task, judging by data published on Tuesday.

 

Those hoping that April industrial production data out on Tuesday would provide some measure of comfort on the direction of Mexico’s economy would be sorely disappointed.

Industrial output in Latin America’s second largest economy fell 1.7 per cent compared to March in seasonally adjusted terms. The drop was the biggest monthly decline so far this year and the worst since December 2012 when it fell 2 per cent. 

Some relief on Tuesday for a Brazilian government getting desperate for signs of life in the economy: more motor vehicles were made in Brazil in April (340,865) than in any other month in history. Considering the auto sector makes up about a fifth of Brazilian industry, that’s got to be good news. Hasn’t it?

Well, yes and no. 

India auto factoryIndia’s industrial production data for the month of February has come in higher than expected. Industrial production rose 0.6 per cent year-on-year – a sharp contrast with analysts’ forecasts of a 0.7 per cent decline.

Looks like good news for an economy struggling to generate growth. But the headline figure doesn’t tell the whole story: it’s boosted by the volatile capital goods segment, which expanded 9.5 per cent. Basic goods output fell by 1.8 per cent, and intermediate goods production by 0.7 per cent. 

India auto factoryIndia’s industrial production increased in January – only the fourth month out of the past ten to see positive growth.

The index of industrial production was up 2.4 per cent year-on-year this January, double the 1.2 per cent rate forecast in the market. But one month’s growth doesn’t mean recovery is imminent. 

Is inflation getting out of control in Brazil? The national statistics office said on Thursday that consumer prices rose by 0.86 per cent in January, bringing the annual rate to 6.15 per cent. That’s up from 5.84 per cent in December and heading closer to the upper limit of the government’s tolerance range of 6.5 per cent, two percentage points above its inflation target.

The target, it seems, has been forgotten. And if industrial production figures out this week are any guide, it is unlikely to be remembered any time soon. 

India auto factoryThe surprise decline in India’s industrial output in November, disclosed in figures published on Friday, was largely due to the Diwali holiday, when many businesses close for days.

Industrial production fell 0.1 per cent in November year-on-year basis, in stark contrast to revised growth of 8.3 per cent in October – when the figure was boosted by the fact that in 2011, Diwali fell in October.

But forget holidays. The real story is that IP has grown in just three of the last eight months. The pressure to cut interest rates is getting stronger

Another dose of bad news for Hungary on Tuesday as industrial production figures for November showed a much sharper contraction than expected. Output fell by 6.9 per cent year on year, much worse than the consensus 3.5 per cent contraction.

It leaves the country facing a deepening recession just as the government has thrown caution to the wind and decided it can do without the support of an IMF loan. The chances of an adequate response seem limited given the changes about to take place at the top of the central bank. 

The conventional wisdom for the past six months has been that south-east Asia is pretty much the last man standing in the global economy.

Thailand, Malaysia, Indonesia, the Philippines and Singapore have delivered decent growth, thanks to strong domestic demand and, even as the eurozone crisis and China’s deceleration have buffeted them.

But the region may be starting to slow. 

South Korea’s economy is losing pace quickly as it battles strong headwinds from the US and Europe. Industrial output fell for the third consecutive month in August, adding to pressure for additional monetary stimulus.

Industrial output in fell by a seasonally adjusted 0.7 per cent from July, following a 1.9 per cent decline in July. Part of the fall was caused by a wave of strikes in the auto sector during the summer. But the downward trend is unlikely to be reversed any time soon.