UPDATE 2-Mexico auto output, exports show recovery in Oct

By Jason Lange MEXICO CITY, Nov 10 (Reuters) - Mexican auto production jumped in October from the previous month due to higher demand in the United States, a sign that Mexico's economy is recovering from a deep recession. The Mexican Automotive Industry Association, or AMIA, said on Monday that automakers produced 184,769 vehicles in October, up 26 percent from September and the highest level since late last year. Mexican auto output plummeted early this year as the country fell into its deepest recession since the 1930s. But output has been rising in recent months and October was the fourth straight monthly increase. "We can say that we hit bottom," AMIA president Eduardo Solis said at a news conference. Mexican auto exports of 145,711 units were also up in October, jumping 24 percent compared to the previous month to their highest level since late 2008.

Year-on-year, October exports were down 13 percent. Mexican production was still down 13.9 percent from October 2008. Mexico is a major car producer and sends about 70 percent of its exports to the United States, where auto sales have been slashed by the economic downturn. Auto sales in the United States, which accounts for most of the foreign demand for Mexican-built cars, hit an annualized rate of 10.46 million units in October. That was a level not seen in a year, except for July and August when the U.S. government's "cash for clunkers" incentives program sparked a surge in sales. The U.S. recession has slammed Mexican factories this year, and a spike in unemployment led Mexico's consumers to cut back on retail purchases. Mexico's economy is expected to contract 7.2 percent in 2009, according to a recent central bank poll of economists. That would be the country's steepest economic contraction since 1932. Although consumer sentiment remains at an all-time low, signs of recovery have been sprouting up in Mexican factories. While the central bank thinks the economy likely grew about 3 percent in the third quarter from the previous quarter, economists think a recovery in employment will lag and keep the return to growth muted next year. ((Reporting by Jason Lange, Editing by Gary Crosse)) Keywords: MEXICO ECONOMY/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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