Industrial activity fell -1.

4% in November, a more severe decline than was forecasted by

the market consensus (-0.3%). Using seasonally adjusted figures, industrial production
rose 0.14%per month. The figures in October were revised slightly (from 0.1% to 0.3% in
annualized growth and from 0.5% to 0.4% monthly, seasonally adjusted.)

Manufacturing is the largest industrial sector (almost 50%), slowed its annual expansion
rate to 0.6%, from the 3.6% recorded in October. The Food Industry (10.2% of the total)
grew 0.3%, manufacturing of transportation equipment (8.4% of the total) increased 6.1%
annualized, the Chemical Industry (5.8% of the total) decreased 2.3% annualized and
Primary Metals1 (2.2% of the total) increased by 3.4% annualized. Using figures adjusted
seasonally, the manufacturing sector presented a monthly decrease of 1.03%. The
progress in manufacturing was affected due to the slowdown of its two main components
(Food and Transportation Sectors). Food processing rose above an annual rate of 1.1% in
October to 0.3% in November, while the manufacturing of transportation equipment
slowly grew from an annual growth of 11.1% in October to 6.1% in November.
December could again present weak readings in this industry based on the most recent
report of automotive production of the AMIA2. However, the Manufacturing Sector is
expected to maintain a positive outlook for the year, sustained by strong projected growth
indicators in the US economy.

On the other hand, the Construction Sector, with a weight of about 22% of industrial
activity, recorded a new setback of -5.0% annualized (-6.9% in October). Within that
1 Primary was chosen over Basic according to government sector
standardization
2 Asociacin Mexicana de la Industria Automotriz

sector, construction of buildings, civil engineering or heavy work, and specialized work
reported contractions of -7.0%, -0.6% and -2.0% respectively (-6.8%, -8.3% and -4.6%
previously). Using seasonally adjusted figures, construction grew 1.82% after 5
consecutive months of monthly drops. Construction softened its annual decline due to
investments in infrastructure (government expenses), but residential construction
continues to be stagnant. The latter affects GDP the most. The Construction Sector
continues to be structurally weakened, although it could recover annual rates in the
following months because of a lower base of comparison.

Mining, which accounts for about 22% of industrial activity, fell -2.3% annually (+0.5%
previously). Within this sector, the extraction of petroleum and gas continues on its
decline, falling -2.3% annually, while the extraction of other minerals rose 1.9%. Using
seasonally adjusted figures, Mining rose 0.13% monthly.

Finally, the generation, transmission, and distribution of electrical energy, water and gas
to the final consumer rose 0.4%. Using seasonally adjusted figures, Utilities marginally
rose 0.09%.