Mexico economic activity climbs in April

MEXICO CITY: An expanding services sector helped Mexico's economic growth beat analysts' expectations in April while the year-over-year number disappointed as economists grow wary about future US demand.

Economic activity rose by 0.35 percent in April from the previous month while analysts had expected a rise of 0.20 percent.

Compared to a year ago, though, economic activity was 2.44 percent in April, the national statistics institute said on Tuesday, while analysts had expected an expansion of 3.0 percent.

The services sector expanded by 0.39 percent in April while the other two sectors of the economy declined in month-ago terms. The industrial sector contracted 0.14 percent, its third-straight decline, while the agriculture sector was off 2.04 percent.

Economists expect the economy could expand by roughly 4.5 percent this year after posting a 5.5 percent growth rate in 2010 -- the strongest in a decade.

Still, the fate of the Mexican economy is strongly tied to the United States which absorbs roughly 80 percent of exports and there are signs that consumer demand north of the border has slackened.

Weak new car sales is seen as one reason why US consumer spending was flat in May after ten straight months of gains and that weakening demand could hurt Mexico auto factories.

April auto production in Mexico fell 40 percent to 93,105 units from record production in March, according to government data.

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