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Mexico: PMI falls into contraction territory in July

August 1, 2014

The seasonally-adjusted manufacturing indicator elaborated by the Mexican Institute of Finance Executives (IMEF) fell from 50.3 points in June to 49.1 points in July. The reading, which undershot the 50.1 points the market had expected, is below the 50-point threshold that separates expansion from contraction in the manufacturing sector for the first time since October 2013.

July’s result stemmed from lower readings in the sub-indices of production levels and new orders than in the previous month. Nonetheless, both readings were still in expansion territory. Conversely, employment and supply deliveries improved over the previous month, but these sub-indicators remained in contraction territory. Meanwhile, the inventories sub-category fell back to contraction territory for the first time since December 2013.

Analysts continued to warn that the IMEF manufacturing PMI continues to show some degree of divergence from the equivalent index in the United States as well as with respect to hard data on the domestic manufacturing sector, which are reasonably robust. In July, the ISM manufacturing index rose to 57.1 from 55.3 in June.

The HSBC manufacturing PMI edged down from 51.8 in June to 51.5 in July. According to HSBC, July’s data continued to indicate a moderate improvement in business conditions in the Mexican manufacturing sector, with further rises in production and new orders. In addition, external demand continued to support growth in the sector. Conversely, employment deteriorated for the second consecutive month.

LatinFocus Consensus Forecast panelists expect Mexican industrial production to increase 2.9% in 2014, which is down 0.1 percentage points over the previous month’s projection. LatinFocus panelists see industrial production expanding 3.9% in 2015.


Author:, Senior Economist

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Mexico PMI July 2014

Note: Composite index in the manufacturing report on business (PMI) for the U.S. and seasonally-adjusted manufacturing index for Mexico. HSBC 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 HSBC.


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