Mexico industrial growth likely weakened further in May

Trade data suggests UK industrial production likely weakened further in May, growing by just 0.8% yoy - the weakest growth in a year. 

This, however, still means that industrial output may have expanded in May on a sequential basis by 0.1% mom as against the contraction in April by nearly same rate, says Societe Generale. The bulk of the recent weakness is caused by the drag from the mining sector (fell 8.3% yoy in April). Manufacturing continues to grow at a trend pace while the construction sector has been growing above trend on average following its bounce back from a deep contraction in 2013-14.

"Given the most recent US economic data releases, we believe that the Mexican industrial production slowdown may be temporary, although it could lead to the further downgrade of our growth expectations for Q2 and 2015. Improvement in IP growth through the remainder of this year should help the economy to grow close to its potential in 2015 and then to strengthen in 2016. Currently, we expect the Mexican economy to grow by 2.6% in 2015 and 3.2% in 2016," according to Societe Generale.