Mexico's economy contracted by 0.2pc in the third quarter from a year earlier, as growth in the agriculture and services sectors failed to offset a sharp downturn in the industrial sector.
The contraction in gross domestic product (GDP), reported by statistics agency Inegi, was milder than the 0.4pc decline expected by Mexican bank Banorte but marked the first annual contraction of the year, following flat growth in the second quarter and a 0.9pc expansion in the first. It was also the first negative result since the first quarter of 2021.
Of the three main GDP components, only the industrial sector, which includes manufacturing, construction and mining, posted a decline, shrinking by 2.9pc — its fourth consecutive quarterly fall — after drops of 1.7pc and 0.8pc in the previous two quarters.
Banorte said timely data suggest construction was weighed down by civil engineering, while manufacturing was mixed, with transportation equipment — the largest component — falling. Meanwhile, "mining apparently recovered, aided by the oil sector and a positive bias in related services," Banorte said.
The result added to the perception of Mexico's economy on the verge of sliding into recession.
Mexico's industrial output has contracted by more than 1pc in a quarter only 12 times since 1993, and 10 of those declines were all during recessions, Banco Base chief economist Gabriela Siller said. Industrial output has now declined by more than 1pc twice this year.
Agriculture expanded by 3.6pc in the third quarter, following 2pc growth in the second and 7.2pc in the first, benefiting from milder weather after last year's extreme heat and drought. Services accelerated by 1pc in the third quarter, up from 0.9pc in the previous quarter.
Quarter on quarter, Mexico's seasonally adjusted GDP contracted by 0.3pc, compared with 0.6pc and 0.3pc growth in the prior two quarters, Inegi said.
Banorte expects a "rebound in momentum" in the fourth quarter, supported by new federal infrastructure projects and a possible improvement in trade dynamics as US-Mexico-Canada free trade agreement negotiations advance.
