By Jason Lange
MEXICO CITY, March 27 (Reuters) - Mexico's economy plunged in January at its fastest pace since a deep crisis in 1995, battered by a collapse in U.S. demand for its exports and a steep fall in the consumer spending.
In the latest sign that Mexico is tumbling into recession, the economy shrank at a 9.48 percent annual rate in January, the national statistics agency said on Friday.
American consumers, rocked by a recession and a collapse in their housing market, have cut back on products made south of the border like cars and televisions.
That has been slamming Mexico's factories for months, and now pain is being felt throughout the economy as unemployment spikes and Mexican consumers close their wallets.
The service sector, which makes up about 60 percent of the economy, fell 9.13 percent during the month.
'My wages are falling, so in my family now we have to go without more things every month,' said Ranulfo Villantes, who earns commissions on the spicy beef stew he sells at a stand underneath a Mexico City freeway.
Villantes said sales have been falling as the office crowd cuts back on eating out, and several workers from nearby stalls selling tacos, fresh juice and shrimp cocktails have been laid off.
Economists already were expecting the economy to shrink during the first three months of this year after contracting 1.6 percent in the fourth quarter of 2008, but January's numbers point to an even darker future.
'The GDP reading in the first quarter is going to be worse than what everybody had been expecting,' said Scotiabank economist Mario Correa.
Citing the report, UBS cut its forecast for Mexico's 2009 economic output. It now sees a 4.3 percent contraction. Before, it expected a drop of 3.8 percent.
The last time Mexico posted such a dire number for monthly economic output was the mid-1990s, in the throes of a financial meltdown that became known as the Tequila Crisis.
Industrial output, which includes manufacturing and oil production, dropped 11.09 percent in January from a year earlier.
On a seasonally adjusted basis, economic output fell 3.99 percent in January compared with December, according to the agency's global economic activity indicator.
(Additional reporting by Robert Campbell; Editing by Diane Craft) Keywords: MEXICO ECONOMY/ (jason.lange@thomsonreuters.com; +52 55 5282 7151; Reuters Messaging: jason.lange.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
MEXICO CITY, March 27 (Reuters) - Mexico's economy plunged in January at its fastest pace since a deep crisis in 1995, battered by a collapse in U.S. demand for its exports and a steep fall in the consumer spending.
In the latest sign that Mexico is tumbling into recession, the economy shrank at a 9.48 percent annual rate in January, the national statistics agency said on Friday.
American consumers, rocked by a recession and a collapse in their housing market, have cut back on products made south of the border like cars and televisions.
That has been slamming Mexico's factories for months, and now pain is being felt throughout the economy as unemployment spikes and Mexican consumers close their wallets.
The service sector, which makes up about 60 percent of the economy, fell 9.13 percent during the month.
'My wages are falling, so in my family now we have to go without more things every month,' said Ranulfo Villantes, who earns commissions on the spicy beef stew he sells at a stand underneath a Mexico City freeway.
Villantes said sales have been falling as the office crowd cuts back on eating out, and several workers from nearby stalls selling tacos, fresh juice and shrimp cocktails have been laid off.
Economists already were expecting the economy to shrink during the first three months of this year after contracting 1.6 percent in the fourth quarter of 2008, but January's numbers point to an even darker future.
'The GDP reading in the first quarter is going to be worse than what everybody had been expecting,' said Scotiabank economist Mario Correa.
Citing the report, UBS cut its forecast for Mexico's 2009 economic output. It now sees a 4.3 percent contraction. Before, it expected a drop of 3.8 percent.
The last time Mexico posted such a dire number for monthly economic output was the mid-1990s, in the throes of a financial meltdown that became known as the Tequila Crisis.
Industrial output, which includes manufacturing and oil production, dropped 11.09 percent in January from a year earlier.
On a seasonally adjusted basis, economic output fell 3.99 percent in January compared with December, according to the agency's global economic activity indicator.
(Additional reporting by Robert Campbell; Editing by Diane Craft) Keywords: MEXICO ECONOMY/ (jason.lange@thomsonreuters.com; +52 55 5282 7151; Reuters Messaging: jason.lange.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.