Mexico: Manufacturing sentiment rises further in November
December 5, 2012
In November, the seasonally-adjusted IMEF manufacturing index rose to 52.5 points from a revised 52.1 points in October. The figure, which marked a second consecutive increase, drove the index further above the 50-point threshold that indicates that the manufacturing sector is expanding. According to IMEF, the November reading indicates a recovery in manufacturing activity during the final quarter of the year.
Three out of the five sub-categories that compose the index improved over the preceding month, in particular the sub-index related to employment, which reached its highest level in almost two years. In contrast, the sub-index related to supplier deliveries, the only category currently below the 50-point threshold, fell further in November. Meanwhile, manufacturing sentiment in the United States, which is closely related to its Mexican counterpart, dropped 2.2 percentage points to 49.5 points.
The subdued reading surprised the market on the downside, as analysts had expected the index to ease only to 51.4 points, suggesting that manufacturing activity softened in November. Moreover, according to the ISM, "comments from the panel this month generally indicate that the second half of the year continues to show a slowdown in demand" while adding that "respondents also express concern over how and when the fiscal cliff issue will be resolved". The latter bodes ill for a stronger expansion of the Mexican manufacturing sector going forward.