Mexico's industrial production in May was -0.94% yoy, which is first negatice growth rate in 13 months. As a result and given the strong correlation between monthly supply-side proxy of growth and industrial production, Societe Generale estimates growth to have slowed substantially to 0.5% yoy in May - the weakest pace since April 2014.



According to Societe Generale, "The seasonally-adjusted series is expected to show a sequential decline of 0.9% mom and, barring a strong improvement in June, the economy looks set to slow further in Q2 after posting weak growth of 1.6% qoq (annualised ). What it also implies is that the economy could grow below trend in 2015 - presenting downside risk to our current forecast of 2.6% - unless it shows sharp improvement in H2 something we do not rule out for now."



Exports and investment remain crucial to manufacturing growth and the near-term growth acceleration. With the US economy expected to improve in H2, acceleration in Mexico's trade-led growth is expected, adds SocGen.