Good news for China and Bad news for Mexico
I've got good news and bad news. Which do you want first? OK, I'll start with the good.
There's more positive news out of China this morning, the country's industrial production increased more than forecast last month. Output at Chinese factories rose 12.3% year-over-year, the largest jump since Aug. 2008. This is larger than the 11.8% increase that economists had forecast.
Furthermore, despite predictions that lending would tighten and begin to choke off growth it unexpectedly increased as well in August. Local-currency new loans were 410.4 billion yuan ($60 billion), up from 355.9 billion yuan a month earlier.
Also, retail sales in China soared 15.4% year-over year last month. This is slightly better than the average estimate of 15.3% that was forecast.
Mr. Chinese Market cheered these statistics, rising 2.2% on the day.
China Recovery Quickens as Production, Lending Climb
And now for the bad:
This can't be good news for the Mexican economy, the country's oil output is falling faster than expected. This news increases the chance that the country will face a worsening budget shortfall in the future.
Output at Pemex's huge Cantarell field has virtually collapsed to 500,000 barrels a day from its peak of 2.1 million in 2005.
Falling oil exports are costing Mexico approximately $14 billion per year and its government relies on revenue from oil exports to pay for almost 40% of its annual budget.
The head of Pemex claims that its production will stabilize at 400,000 barrels per day. That's waaaay below where it was in the past and who knows if the slide will even stop there.
Mexico's Fading Oil Output Crimps Exports