By Anthony Harrup 

MEXICO CITY -- Mexico's economy picked up sharply in the third quarter, led by a rebound in industrial production as businesses reopened from shutdowns to slow the spread of the coronavirus.

Gross domestic product, a measure of the country's output in goods and services, expanded 12% in seasonally adjusted terms from the second quarter, the National Statistics Institute said Friday. Industrial production was up 22%, outpacing services, which increased 8.6%.

The rebound from the 17.1% contraction in the previous quarter left economic activity in the July-September period 8.6% below its year-earlier level.

The recovery in industry was helped by external demand for Mexican-made goods -- exports were back above year-earlier levels by September -- and the reopening in June of key industries like autos and construction.

The domestic economy has been slower to recover, as employment and consumer confidence remain well below pre-pandemic levels, and travel and tourism is still sluggish.

As in the U.S., which on Thursday reported a 7.4% expansion in third-quarter GDP, Mexico's recovery is expected to lose steam in the fourth quarter.

"Mexico's economy confirms, one more time, its high dependence on the U.S. economy," said Alfredo Coutiño, director for Latin America at Moody's Analytics. "The economy quit the recession in the third quarter as a result of external demand more than the domestic market."

The third-quarter expansion snapped a string of five consecutive quarters of economic contraction.

Domestic consumption was helped by the government's cash transfers to the most vulnerable groups and to an even greater extent to the increase in remittances from Mexicans working abroad, Mr. Coutiño added.

Economists polled in September by the Bank of Mexico expect output to shrink 9.8% for all of 2020, which would be the deepest recession since the Great Depression of the early 1930s.

Health authorities have warned of a possible second wave of coronavirus infections as the weather turns colder, but don't expect to impose shutdowns like those put in place in April and May.

Mexico has confirmed close to 91,000 deaths of people infected with the virus since March. The number of weekly deaths picked up modestly in mid-October after falling steadily from a high point above 5,000 a week in July.

Mexican schools have been closed since late March, with lessons currently being given online and by television. Public places like shops, restaurants and hotels require customers to use face masks, but President Andrés Manuel López Obrador has rejected the idea of imposing curfews or fines to enforce health recommendations.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

October 30, 2020 09:01 ET (13:01 GMT)