MEXICO CITY: A key barometer of Mexico's battered economy rose strongly in July as businesses regained ground on looser coronavirus containment measures, but the growth in industrial output was slower than the month before, official data showed on Friday.

Mexican industrial output rose 6.9% in July from June but was down 11.3% year-over-year, the national statistics agency INEGI reported on Friday.

The level of industrial production for the month grew less than in June, when output rose nearly 18% compared to May, according to INEGI data.

The monthly industrial output data points to an economic recovery that is losing steam and will likely continue that way, consultancy Capital Economics said in a note.

"This will give impetus for the central bank to continue its easing cycle, especially with little fiscal support on the horizon," it added.

The Banco de Mexico holds its next policy decision on Sept. 24.

Earlier this year, industrial output fell sharply as measures put in place to stem the spread of coronavirus dragged down industries including construction and manufacturing.

A spending proposal for next year's government budget forecasts that Mexico's economy, Latin America's second-largest, will contract 8% this year, which is a somewhat rosier view than the central bank's worst-case scenario of a 13% slump.