Mexico PMI

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Mexico: IMEF manufacturing indicator rises to eight-month high

July 1, 2015

The seasonally-adjusted manufacturing indicator published by the Mexican Institute of Finance Executives (IMEF) increased for the fourth consecutive month and reached the highest level since October 2014. The indicator rose from a revised 52.6 in May (previously reported: 52.4) to 53.1 in June, which was also better than the 52.0 the markets had expected. The indicator continued to deliver positive news that growth in Mexico’s manufacturing output is moving in the right direction as it moved further above the 50-threshold that separates expansion from contraction in business activity in the sector.

Details regarding June’s result were mixed, though. The sub-indicator of manufacturing output improved notably over the previous month and reached its highest point in three years. Less upbeat were the increase in inventories, which hit a three-month high and employment levels that showed a modest gain. Conversely, new orders fell over the previous month and supplier deliveries dropped to a five-month low. The Mexican manufacturing sector is strongly linked to the manufacturing sector in the United States, where the ISM manufacturing also increased in June, which suggests that business activity in the U.S. manufacturing sector is gradually gaining momentum. The ISM manufacturing index rose to 53.5 in June (May: 52.8), which marked a five-month high and moved further above the 50-threshold.

Moreover, another indicator that measures business activity in Mexico’s manufacturing sector fell in June for second consecutive month. The Markit Purchasing Managers’ Index (PMI)—previously elaborated by HSBC—fell from 53.3 in May to 52.0 in June, which marked the lowest level in nearly a year. Markit indicated that at 52.0, the PMI has been above the 50-threshold that separates contraction from expansion in the sector for 21 consecutive months. However, Markit underlined that, “the headline index signaled only a modest upturn in overall business conditions, with the latest reading pointing to the slowest pace of improvement since July 2014.” Markit added that, “Mexico’s manufacturing sector continued to expand in June, but there has been a loss of momentum since the start of the year despite a boost from exchange rate depreciation and improving U.S economic conditions.”

LatinFocus Consensus Forecast panelists expect Mexican industrial production to increase 3.1% in 2015, which is unchanged over the previous month’s projection. LatinFocus panelists see industrial production expanding 3.8% in 2016.


Author:, Senior Economist

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Mexico PMI June 2015

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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