Mexico PMI April 2016


Manufacturing gauges remain broadly unchanged in April

After an impressive start to the year, Mexico’s manufacturing sector heads into the second quarter on solid footing. The seasonally-adjusted manufacturing indicator elaborated by the Mexican Institute of Finance Executive’s (IMEF) remained virtually unchanged in April, inching down from 51.9 in March to 51.8. April’s result was in line with markets expectations and continued to suggest that business activity in the sector is in expansion mode since the indicator remains above 50.

April’s moderation reflected a slowdown in manufacturing output and a drop in new orders. In addition, supplier deliveries fell to the lowest level since November 2014. Despite slower production, Mexican goods producers decided to increase their staffing levels, whit the sub-indicator rising to the highest level in a year.

Another gauge that measures performance in Mexico’s manufacturing sector showed a more pronounced decline in April. The Markit Manufacturing Purchasing Managers’ Index (PMI) fell from 53.2 in March to 52.4 in April, which was a three-month low. According to Markit, the Mexican manufacturing sector continues to experience a healthy environment for business and activity, but the latest numbers suggest a loss in momentum. Production and new businesses decelerated and firms also reported weaker export sales. Moreover, the accumulation of post-production inventories was slower than in March. In this survey, manufacturers also indicated that they increased their staffing levels.

North of the border, business activity in the U.S. manufacturing sector moderated in April. Following two consecutive increases, the ISM manufacturing index declined from 51.8 in March to 50.8 in April. The ISM indicator continued to suggest expansion in the manufacturing sector—it sits above 50—but the drop signals that the pace of growth slowed considerably.

Panelists participating in the LatinFocus Consensus Forecast expect Mexican industrial production to increase 2.8% in 2016, which is unchanged over the previous month’s projection. Panelists see industrial production expanding 3.5% in 2017.

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Mexico PMI Chart

Mexico PMI April 2016 0

Note: Composite index in the manufacturing report on business (PMI) for the U.S. and seasonally-adjusted manufacturing index for Mexico. Markit Manufacturing PMI. Readings above 50 points indicate an expansion in the manufacturing sector while readings below 50 points indicate to a contraction.
Source: Institute for Supply Management (ISM), Mexican Institute of Financial Executives (IMEF, Instituto Mexicano de Ejecutivos de Finanzas) and Markit.

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