The "80-20" rule strikes again...

Did you know that manufacturing companies employing more than 500 people -- 17% of all manufacturing firms -- exported 82% of all manufactured exports in the 2009-2012 period? Ten firms were responsible for 24% of manufactured exports; 50 firms exported 41% of the total.

2.7%, not 3.9%...

Hacienda has slashed its 2014 growth projection from 3.9% to 2.7%. Using publication of the first quarter growth figures, Hacienda finally recognized publicly what businesspeople have been saying since January: there's no way the Mexican economy will grow 3.9% this year.

Besides the weather-induced weak growth in the US, Hacienda acknowledged that the fiscal reform hit consumption in the first quarter. The adjective "hard" wasn't used, but there was no need to: the growth rate speaks for itself. Arguing that the "adjustment" to the higher prices resulting from the tax package is pretty much accomplished, Hacienda says that consumption had already begun to pick up in April. The magnitude of the impact of the fiscal reform on consumption can be appreciated by the fact that, according to Hacienda, public sector spending on subsidies, which includes programs directed to the most vulnerable segments of the population, was 30.8% higher in real (discounting inflation) terms in the first quarter of this year than in the first quarter of 2013.

As for public sector investment, Hacienda underlined the 46.5% real increase in the public sector's "physical investment" in the first quarter (oh, the wonders of a low base for comparison) and vowed to "redouble its efforts to assure efficiency, agility and transparency in the execution of public sector spending". That's good news, especially since companies don't report that they've seen seen a burst of public investment.

And, as a reminder of the importance of the energy reform, Hacienda also blamed the 1.1% drop in oil production (a 1.3% contraction in the petroleum sector's GDP) for the weak first quarter. 

AT&T to part company with Carlos Slim...

AT&T's announcement that it plans to acquire DirecTV has implications for Mexico. According to the May 19 New York Times, AT&T is planning to sell the roughly 8% it owns of America Movil in order to forestall regulators' concerns about the impact of the merger in Latin America. 

A must read...

Alfredo Corchados' Midnight in Mexico: A Reporter's Journey Through A Country's Descent Into Darkness should be on the reading list of anyone interested in Mexico. Well-written and illuminating... Now out in paperbackk from penguin Books.

A stronger peso...

The average monthly fix rate peso fell below $13.00 for the first time since last August with today's setting. Granted, May's $12.99 average is based on only five working days and there are 16 left to go in the month.

Still, it seems that the peso is recovering nicely from the aversion to emerging market currencies induced by the Fed's tapering announcement. The average monthly fix rate has appreciated since February. The spread between the minimum and maximum fix rate during the month has fallen dramatically. And, this month's maximum fix rate is the lowest it's been since May 2013, when then Fed Chairman Bernanke announced that, one day, the Fed would begin to reduce its monthly asset purchases.  

The education census...

The census mandated by the educational reform passed early on in the sexenio has been completed, more or less. It’s the first count of how many schools there are in the country and how many people are employed as teachers. It’s more or less because in one out of every eleven schools, the national statistical institute, INEGI, wasn’t allowed in to do its work. The percentage was highest in some of México’s poorest states, ones in which the more radical teachers’ union, the CNTE, reigns: in Chiapas, 41% couldn’t be surveyed; in Oaxaca, 27.4% and in Michoacán, 27.3%.

The census findings are dismal. One out of nine public schools doesn’t have electricity. (So much for the digital classroom…) Three out of ten don’t have running water. Nearly half aren’t connected to sewers. One out of eight doesn’t have a bathroom. Nearly three-quarters don’t have a telephone landline.

Not everyone who is paid by a school works in one. Of that group of 298,174 people, nearly two-fifths have retired, receive pensions, have quit or died but are still paid as active workers. Nearly as many are supposedly working in another school. Another 13.1% are aviadores, the colloquial term for people who are paid for jobs they’ve never done or that don’t exist. Only a tenth work for the union or have other responsibilities. The president of Mexicanos Primeros, a highly regarded NGO (non-governmental organization) dedicated to educational issues, estimates the annual cost of the missing workers (nearly twice the number of workers employed by Pemex) at $35.8 billion.

The census isn’t the only issue. The Administration has brought suit in the Supreme Court against the states of Oaxaca, Chiapas, Michoacán, Zacatecas, Sonora and Baja California for failing to obey the law.