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Economic report
March 2007
I.
(Figure 1)
REAL SECTOR
Industrial production
(Annual percent change, 6-month moving average)
• Industrial production rose in January
Industrial production increased 1.4% annual
in
January
2007.
In
January
2007
manufacturing
output
rose
0.1%,
construction increased 5.7% and utilities
grew 6.8%, mining decreased 0.4%, all at
annual rates. Seasonally adjusted rates
displayed a decline in industrial production
of -0.69% in January from December. (INEGI)
Source: INEGI
(Figure 2)
Retail Trade
January of each year
(Annual percent change)
• Wholesale and retail sales increased
during January 2007
Wholesales, employment and real average
earnings increased 4%, 0.3% and 4.8%, in
that order, from January 2006 to January
2007. Retail sales and employment rose 2.3%
and 2.7%, while real average earnings
decreased 0.4%, in January 2007 with
respect to the same period of 2006. (INEGI)
Source: INEGI
• Unemployment rate slightly rose in
February 2007
Unemployment rate reached 4.02% in
February 2007, higher than the 3.6% of
February
2006.
By
gender,
men’s
unemployment rate rose from 3.54% to
3.70%, while women’s unemployment rate
increased from 3.7% to 4.57%. Seasonally
adjusted rates displayed an unemployment
rate of 3.84% in February, a rise of 0.05% with
respect to the previous month. (INEGI)
(Figure 3)
Unemployment rate
February of each year
(Percentage of Economically Active Population)
Source: INEGI
(Figure 4)
Total workers in the IMSS
• Employment rose in January 2007
The number of permanent and eventual
urban workers affiliated to the Public Social
Security Institution (IMSS) increased by
116,267 at February 28, 2007, to reach
14,083,268. Between February 28, 2006 and
February 28, 2007 total employment
increased by 868,770, an increase of 6.6%.
(STPS)
(Annual percent change, 2006-2007)
Source: STPS
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Economic report
March 2007
(Figure 6)
II. FINANCIAL SECTOR
Annual Inflation
(Annual percent change, CPI, core inflation and no-core-inflation)
• Consumer price index increased in
February 2007
Inflation reached 0.28% in February 2007,
according to Mexico’s Central Bank. Annual
inflation in February was 4.11%, 0.13% higher
than in January. Cumulative inflation in the
first two months of 2007 was 0.8%. Core
inflation and no-core inflation reached
0.41% and 0.02% in February 2007. In annual
terms these price indexes rose 3.95% and
4.44%, respectively. (Banxico)
• Interest rates of Mexican Treasury Bills
(Cetes) decreased
The Mexican Treasury Bills yields (Cetes
yields) with maturity of 28, 91 and 182 days
fell 1, 4 and 4 base points in March 27, 2007
to reach 7.03%, 7.15% and 7.28%,
respectively. Government Bonds rates with
10 years of maturity and Udibonos rates with
20 and 30 years of maturity fell 34, 17 and 15
base points, to reach 7.65%, 3.61% and
3.61%, respectively. (Banxico)
Source: Banxico
(Figure 7)
Primary market auction: Cetes 28 days
Weekly auctions
Source: Banxico
(Figure 8)
Exchange rate peso/dollar
2006-2007
• The exchange rate displayed a slightly rise
The Mexican peso exchange rate reached
11.04 pesos per dollar (ppd) in March 30,
reflecting a 2.11 cents increase from the
previous Friday level. During 2007 the
exchange rate has averaged 11.02 ppd,
displaying a depreciation of 24.05 cents.
(Infosel)
Source: Infosel
(Figure 9)
• Mexico’s country risk showed a slightly
decrease
Mexico’s country risk, measure by J.P.
Morgan’s EMBI+ Index, decreased 2 base
points (bp) in March 30 with respect to the
previous week, reaching 97 bp. On the other
hand, Argentina’s country risk declined 2 pb,
reaching 205 bp, and Brazil’s country risk fell
6 bp to locate at 167 pb. (JP Morgan e
Infosel)
Country risk
2006-2007
Source: EMBI+, J.P. Morgan e Infosel
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Economic report
March 2007
(Figure 10)
International Reserves
• International reserves slightly fell
Mexico’s international reserves fell by 2
million dollars (md) in March 23, 2007 with
respect to their level at March 16, 2007,
reaching
69,330
md.
During
2007
international reserves have raised 1,650 md.
(Banxico)
• Mexico’s stock market displays a growing
path
Mexico’s Stock Market Index (IPyC) rose
1.68% in February 23, reaching 28,747.69
points. The IPyC showed a cumulative profit
of 8.69% in Mexican pesos and 6.52% in US
dollars with respect to the end of 2006.
(BMV)
• The retirement funds grew in January
Mexico’s balance of workers Savings for the
Retirement System (SAR) reached 1,240.4
billions of pesos (mmp) in February, 11.9%
more than February 2006. Funds for housing
(446.4 mmp) rose 9.6% at real annual rate.
Funds for retirement (794 mmp) grew 13.3%.
Funds managed by the IMSS rose 13.6% and
those managed by the ISSSTE increased
8.6%. (Banxico)
At the end of each year, Billions of Dollars
Source: Banxico
(Figure 11)
Mexican Stock Market Index
Points
Source: BMV
(Gráfica 11)
Balance of Funds of Retirement
(Annual percent change)
III. PUBLIC FINANCES
•Public finances displayed a surplus in
February
Mexico’s Public balance reached a surplus
of 28.6 billions of pesos (mmp) during
February 2007, in line with its target.
Cumulative public surplus reached 80.2
mmp at February 2007, higher than the
surplus of 55.7 mmp displayed in the same
period of 2006. Primary balance reached a
cumulative surplus of 115.5 mmp in February,
73.9% more than 2006.
Source: Banxico
(Gráfica 12)
Public Balance
January-February of each year
Source: SHCP
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Economic report
March 2007
IV. EXTERNAL SECTOR
• The trade balance broadened during
January 2007
The trade balance deficit reached 1,709
million dollars (md) in January 2007
according to revised information. The trade
deficit was driven by a fall in motor vehicle
exports, and a narrowing surplus in the
petroleum trade balance. Total exports
attained 18,989 md, 1.1% lower than in
January 2006. Non-oil exports increased
4.3%, and oil exports decreased 25.7%.
Imports increased 11.8%, to reach 20,698
md. Consumer goods imports increased
23.3%, capital goods imports raised 11% and
intermediate goods imports augmented
9.9%. (INEGI)
• Workers’ remittances increased in
February 2006
Remittances from Mexican workers in other
countries (mainly U.S.A.) reached 1,695 md
in February 2007, 2.7% higher than the flows
registered in February 2006 and 1.1% lower
than the flows of January 2007. The number
of transactions in February 2007 was 4.9
millions, 2.5% higher than the level recorded
in February 2006. The average amount of
each transaction was 346.8 dollars.
(Banxico)
(Figure 12)
Trade Balance
January of each Year (million dollars)
Source: INEGI
(Figure 15)
Remittances
February of each year
Millions of Dollars
Source: Banxico
(Figure 16)
Oli Prices
Dollars per barrel, 2006-2007
• Oil prices increase
The price of the Mexican oil mix was 55.25
dollars per barrel (dpb) at March 30,
increasing 8.18% from the level of March 23;
the futures for April for West Texas
Intermediate (WTI) and Brent in the
derivatives market were 65.87 and 68.10
dpb, respectively, raising 5.76% and 7.79%
from March 23 figures. During 2007 the price
of Mexican oil mix reached a cumulative
increase of 13.54% and an average level of
47.12 dpb. (Pemex and Infosel)
Source: Pemex and Infosel
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Economic report
March 2007
V. OUTLOOK
• An inflation of 3.62% is expected in 2007
Banamex-Citigroup.- According to the Outlook Survey of Financial Markets Analysts, inflation at
the end of 2007 could reach 3.68% (this level is lower than their previous forecasts of 3.7%). The
Banamex-Citigrup projection is 3.62%. Core inflation in 2007 will be 3.56%.
• The Mexican economy will grow near 3.6% in 2007
BBVA-Bancomer.- Although it will depend in the performance in figures of consumption and
investments in the next months, the behavior of aggregated demand and supply is in line with a
3% growth in the first quarter of 2007 and 3.6% for the whole year.
• Interest rates are expected to fall in the fourth quarter
Banamex-Citigroup.- According to a survey the interest rate (now at 7%) will end 2007 in 6.75%. A
fall in 25 base points is expected for 80% of the analysts surveyed. This expectation is driven by a
projection of 3.6% for core inflation in October and 3.5% in November.
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