August 6, 2019 / 3:24 PM / 4 months ago

Mexico gross fixed investment falls in May for a fourth month

MEXICO CITY (Reuters) - Mexican gross fixed investment fell for a fourth straight month in May as the construction sector continued to decline, the national statistics agency said on Tuesday.

Gross fixed investment, a measure of spending on machinery, equipment and new construction, dropped 7.4% from the same month a year earlier in unadjusted terms. That was the biggest drop since April 2017, and the fourth consecutive month of contraction.

In seasonally adjusted terms, the figure was down 6.9% in May versus a year ago, marking its largest decline since September 2013.

“Binding fiscal constraints on public sector investment, high real interest rates and more exigent domestic financing conditions, as well as an overall lackluster outlook for final domestic demand, should all remain headwinds for investment spending,” said Goldman Sachs’ head of Latin American research Alberto Ramos.

Concerns about economic policy under President Andres Manuel Lopez Obrador, who took office in December, and uncertainty surrounding U.S. tariff threats and a regional trade deal meant to replace the North American Free Trade Agreement are “likely to continue to have a negative impact on activity by rendering domestic and foreign investors more defensive,” Ramos added.

Additionally, gross fixed investment fell 2.7% in May from the previous month in seasonally adjusted terms. It was the fourth month-on-month contraction since Lopez Obrador took office.

Reporting by Anthony Esposito; Editing by Bernadette Baum

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