Mexico PMI October 2016


Mexico: Manufacturing activity decelerates in October

November 1, 2016

Business activity in Mexico’s manufacturing sector lost momentum at the outset of the fourth quarter. The seasonally-adjusted manufacturing indicator produced by the Mexican Institute of Finance Executives (IMEF) fell from a revised 51.2 in September (previously reported: 51.7) to 50.7 in October. The result undershot the 51.1 the market had expected and remained just above the 50-threshold that separates expansion from contraction.

Not all the underlying details were as downbeat as the headline number. While the output and supply delivery sub-gauges slipped in October, encouraging signs came from new orders and employment and a drop in inventories.

Another gauge that measures performance in Mexico’s manufacturing sector showed a virtually unchanged reading in October. The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit edged down from September’s 51.9 to 51.8, thereby also remaining just above 50. According to HIS Markit, the data suggest a solid expansion in manufacturing output and a moderate increase in new orders. Moreover, employment continued to grow in October, although at a softer pace than in September.

In the U.S., the Institute for Supply Management’s (ISM) manufacturing index rose for a second consecutive month in October, climbing to 51.9 (September: 51.5). The increase bodes well for Mexico’s manufacturing sector.

According to the FocusEconomics Consensus Forecast panel, Mexican industrial production will increase 0.6% in 2016, which is down 0.5 percentage points from the previous month’s projection. The panel of analysts surveyed this month by FocusEconomics sees industrial production expanding 1.9% in 2017, which is unchanged from last month’s forecast.

Author:, Senior Economist

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Mexico PMI Chart

Mexico PMI October 2016

Note: Manufacturing ISM Report On Business (PMI) for the U.S., seasonally-adjusted manufacturing index for Mexico and IHS 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 IHS Markit.

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