| | |  Business News 
Mexico Factory Output Jumps; Auto Exports Surge
 Michael O'Boyle & Patrick Rucker - Reuters
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May 12, 2010
| | German automaker Volkswagen recently hired new workers in Mexico as it plans to launch a new compact model built at a factory east of the Mexican capital. | |
Mexico City - 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.
(Writing by Jason Lange, additional reporting by Luis Rojas; Editing by Andrew Hay)
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