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Mexico PMI June 2018

Mexico: Manufacturing activity stagnates in July

Mexico’s manufacturing sector began the third quarter tepidly. On the one hand, the seasonally-adjusted manufacturing indicator produced by the Mexican Institute of Financial Executives (IMEF) fell 2.0 points in July to 50.0 points, the threshold that separates expansion from contraction in the manufacturing sector and a 14-month low. July’s reading signaled an end to more than a year of uninterrupted growth in manufacturing, dipping as a result of fewer new orders. Meanwhile, output moderated and, in turn, firms shed staff. Both delivery times and inventories eased their pace, signaling slower purchasing activity.

On the other hand, the manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit was stable in July at 52.1 points—again the strongest reading since March. As a result, the index remained above the 50-point threshold that separates expansion from contraction in the manufacturing sector. Improved output was underpinned by accelerating new orders, which sustained hiring levels. In turn, backlogs of work fell. Purchasing activity lost steam amid longer delivery times, which was reflected in lower input and output inflation. Furthermore, business sentiment was optimistic in the wake of the 1 July general election.

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