Mexico's industrial output unexpectedly falls in June

MEXICO CITY (Reuters) - Mexican industrial production unexpectedly shrank in June, the first contraction since December, casting doubt on the strength of a recovery in Latin America's second largest economy.

Industrial activity fell 0.2 percent in June compared with May, the national statistics agency said on Monday.

The figure was below expectations for a 0.19 percent increase and down from the upwardly revised 0.3 percent expansion in May.

A weak start to the year prompted Mexico's finance ministry in May to cut its annual growth forecast for 2014 to 2.7 percent from 3.9 percent. Analysts have trimmed their outlooks to around 2.6 percent after sluggishness in the second quarter.

Factory output, a component of industrial production, shrank 0.7 percent in June compared with the prior month, its biggest drop since December. Mexico exports mostly manufactured goods and sends nearly 80 percent of its exports to the United States.

The component measuring the construction industry, which contracted sharply last year and shrunk in May, rebounded by 1.2 percent, its strongest reading since last November.

Utilities output was nearly flat compared to the prior month, while mining dipped 0.6 percent amid a slump in oil output.

Industrial output rose 2.0 percent in June from a year earlier, compared with expectations for a 1.7 percent increase. May's rise was revised upward to 1.9 percent.

(Reporting by Michael O'Boyle; Editing by Paul Simao)