July 29, 2016 / 2:07 PM / 2 years ago

UPDATE 1-Mexican economy shrinks in Q2 as industrial output falls

(Adds details on components of GDP)

MEXICO CITY, July 29 (Reuters) - Mexico’s economy shrank more than expected in the second quarter, dragged down by a drop in industrial output, while service sector activity stagnated, preliminary data showed on Friday.

Gross domestic product contracted by about 0.3 percent from the prior quarter, according to seasonally-adjusted data from national statistics agency (INEGI).

Economists in a Reuters poll had expected a 0.2 percent drop in GDP in the April-June period. The economy grew 0.8 percent in the first quarter.

According to INEGI’s initial estimates, the industrial sector contracted by 1.7 percent from the January-March period, which, if confirmed, would be its worst showing since the first quarter of 2009.

INEGI is scheduled to release final Q2 GDP data on Aug 22.

Weak demand in the United States for Mexican-made goods has weighed on Latin America’s second biggest economy.

Mexico’s services sector posted flat growth while agricultural output dipped 0.1 percent, the data showed.

Compared with the second quarter of 2015, GDP expanded 2.4 percent, slightly above analysts’ expectations for 2.3 percent growth. Growth was 2.6 percent in the first quarter versus the year-ago period. (Reporting by Luis Rojas and Michael O’Boyle; Editing by Paul Simao)

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