(Corrects 2nd paragraph to show growth in April-June period was compared to first quarter, not second)
MEXICO CITY, Aug 20 (Reuters) - Mexican economic growth picked up in the second quarter as the services sector expanded at its fastest pace in a year, offsetting flat industrial output hit by wobbling exports and sinking oil production.
The economy expanded by 0.5 percent in the April-June period compared with the first quarter, just above expectations and the 0.4 percent rate in the first quarter, the national statistics agency said on Thursday.
Services picked up to 0.9 percent growth from 0.7 percent in the prior quarter, its fastest pace since the second quarter of 2014. But industrial production showed no growth, reflecting uneven exports to the United States.
Heavy spending by candidates and local governments ahead of elections in July likely boosted consumption during the quarter, economists said.
Marco Oviedo, an analyst at Barclays Capital in Mexico City, said services growth will likely flag after the election splurge.
“We are going to see a hangover in the second half of the year,” he said. Consumer confidence slid in July by the most in three months.
Mexican industrial output, which includes factory and crude oil production, was flat in the second quarter compared with the previous quarter. Slowing production at state oil giant Pemex has weighed.
Mexican auto production and exports fell in July, in a sign of weakness at the start of the third quarter.
On an annual basis, gross domestic product (GDP) grew 2.2 percent in the second quarter from the same period in 2014 compared with an upwardly revised 2.6 percent expansion in the prior three months. Analysts polled by Reuters saw a 2.1 percent expansion in the period.
Mexico’s central bank earlier this month cut its growth forecast to between 1.7 to 2.5 percent for this year.
The finance ministry will hold a media conference later on Thursday where it may cut its 2.2 percent to 3.2 percent estimate for 2015 growth.
Mexico’s monthly economic activity index rose 0.3 percent in June compared with the prior month, the agency said in a separate report, as services and industrial output rose. (Reporting by Alexandra Alper and Michael O‘Boyle; Editing by W Simon)