Mexico: Confidence in the manufacturing sector plummets to lowest level in almost year years
June 4, 2013
In May, the seasonally-adjusted IMEF manufacturing index dropped to 48.3 points from a revised 50.5 points in April (previously reported: 50.7 points). The subdued reading undershot market expectations and represents the lowest figure seen since June 2009. As a result of the monthly decline, the index crossed below the 50-point threshold, which indicates a contraction of the manufacturing sector. According to the IMEF, the general economic trend suggests that the moderation in the pace of growth will continue in the second quarter.
Four out of the five sub-categories that compose the index dropped over the previous month and all five sub-categories recorded values under 50 points. In particular, the sub-indices that refer to new orders and production level slid to their lowest level since June 2009. Only the sub-index related to inventories edged up over April.
Meanwhile, the ISM manufacturing index in the United States also dropped below the 50-point threshold in May, falling to 49.0 points. The subdued reading indicates a contraction in the manufacturing sector in the U.S. for the first time since November last year and bodes ill for a rebound of its Mexican counterpart in the months ahead.
LatinFocus Consensus Forecast panellists anticipate Mexican industrial production to increase 2.7% this year, which is down 0.6 percentage points over the previous month's projection. For next year, panellists see industrial production expanding 3.9%.