Mexico: Manufacturing continues to expand despite moderation in November
December 1, 2014
The seasonally-adjusted manufacturing indicator elaborated by the Mexican Institute of Finance Executives (IMEF) fell from a revised 54.6 in October (previously reported: 54.8) to 53.0 in November. The result also undershot the 54.1 the markets had expected and marked the first drop after three consecutive months of increase. Despite the drop, the indicator continues to hover above the 50-threshold that separates expansion from contraction in manufacturing business activity.
November’s result reflected the fact that output levels as well as inventories moderated over the previous month. Supplier deliveries fell to a three-month low, reaching contraction territory. Conversely, the sub-indicator of new orders jumped to the highest level in 29 months and employment rose to an eight-month high in November. The moderation in the in the IMEF manufacturing also followed a mild deceleration in the U.S. manufacturing sector. In November, the ISM manufacturing index inched down to 58.7 from 59.0 in October.
Another gauge that measures Mexico’s manufacturing sector performance—the Purchasing Managers’ Index (PMI) elaborated by HSBC—rose from 53.3 in October to 54.3 in November, which hit the highest point in nearly two years. HSBC pointed out that, “November data signaled an upturn in overall business conditions across the Mexican manufacturing sector, driven by sharper rises in output and incoming new business.” Commenting on November’s PMI, Mexico Senior Economist at HSBC stated:
“This month’s manufacturing PMI results suggest that manufacturing exports will rebound in the 4Q14 after the moderation registered in in the 3Q14. This is in line with our 2014 GDP forecast at 2.2%, which contemplates growth acceleration in the 4Q14.”
Author: Ricardo Aceves, Senior Economist