Mexico: Manufacturing activity decelerates in October
November 1, 2016
Business activity in Mexico’s manufacturing sector lost momentum at the outset of the fourth quarter. The seasonally-adjusted manufacturing indicator produced by the Mexican Institute of Finance Executives (IMEF) fell from a revised 51.2 in September (previously reported: 51.7) to 50.7 in October. The result undershot the 51.1 the market had expected and remained just above the 50-threshold that separates expansion from contraction.
Not all the underlying details were as downbeat as the headline number. While the output and supply delivery sub-gauges slipped in October, encouraging signs came from new orders and employment and a drop in inventories.
Another gauge that measures performance in Mexico’s manufacturing sector showed a virtually unchanged reading in October. The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit edged down from September’s 51.9 to 51.8, thereby also remaining just above 50. According to HIS Markit, the data suggest a solid expansion in manufacturing output and a moderate increase in new orders. Moreover, employment continued to grow in October, although at a softer pace than in September.
In the U.S., the Institute for Supply Management’s (ISM) manufacturing index rose for a second consecutive month in October, climbing to 51.9 (September: 51.5). The increase bodes well for Mexico’s manufacturing sector.
Author: Ricardo Aceves, Senior Economist