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Mexico: IMEF manufacturing indicator slips in July but remains at healthy levels

August 3, 2015

The seasonally adjusted manufacturing indicator elaborated by the Mexican Institute of Finance Executives (IMEF) edged down to 52.7 in July from 53.1 in June; this last had marked the highest level in eight months. The monthly drop was in line with market analysts’ expectations as they had expected the index to fall to 52.8. Despite the signs of moderation in business activity, the manufacturing PMI remains above the 50-threshold that separates expansion from contraction in activity in the sector.

The details shown in July’s survey were somewhat mixed. While the manufacturing output and employment sub-indices increased over the previous month, reaching a 37-month and 3-month high, respectively, new orders and inventories fell over the previous month. According to analysts, the upbeat output sub-index bodes well for positive momentum in manufacturing production in Q3, whereas the drop in new orders and virtually-unchanged inventories suggest that growth in manufacturing production is likely to slow going forward. The Mexican manufacturing sector is strongly linked to the manufacturing sector in the United States, where the ISM manufacturing also slipped in July. The ISM manufacturing index inched down from 53.5 in June to 52.7 in July, staying, nonetheless, above 50, which marks expansion territory.

Moreover, another gauge that tracks business activity in the Mexican manufacturing sector inched up in July, following two consecutive drops. The Markit Purchasing Managers’ Index (PMI)—previously elaborated by HSBC—edged up from 52.0 in June to 52.9 in July, thus remaining above the 50-threshold that separates expansion from contraction. The indicator has been lingering around expansion territory for 22 consecutive months. In an accompanying statement, Markit pointed out that business conditions in the manufacturing sector have been experiencing a solid improvement in recent months. Specially, growth in manufacturing output, which has been accelerating since June, was buttressed by new-product launches rising exports. Finally, Markit commented that Mexico’s manufacturing sector, “experienced a growth rebound in July and looks well set to remain in expansion mode through the second half of the year.”

LatinFocus Consensus Forecast panelists expect Mexican industrial production to increase 2.4% in 2015, which is down 0.1 percentage points over the previous month’s projection. LatinFocus panelists see industrial production expanding 3.3% in 2016.


Author:, Senior Economist

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Mexico PMI July 2015 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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