Mexico: Confidence in the manufacturing sector plunges to lowest level in four years
July 1, 2013
In June, the seasonally-adjusted IMEF manufacturing index dropped to 47.3 points from a revised 48.1 points in May (previously reported: 48.3 points). The reading undershot market expectations and represents the lowest level observed since June 2009. As a result of the monthly drop, the index remains 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 remain in the second quarter.
Four out of the five sub-categories that compose the index dropped over the previous month and all five sub-indicators recorded values below 50 points. In particular, the sub-indexes that refer to new orders and production level plunged to their lowest level in four years. Only the sub-index related to supplied deliveries improved over May.
On the other hand, the ISM manufacturing index in the United States returned to expansion territory -above the 50 percentage-point threshold - in June, rising to 50.9 points. The monthly improvement suggests that growth in the manufacturing sector is gaining some momentum, which bodes well for 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%.
Author: Ricardo Aceves, Senior Economist