Mexico: PMI reaches 19-month high in March
April 1, 2014
The manufacturing indicator elaborated by the Mexican Institute of Finance Executives (IMEF) rose from 50.4 points in February to 52.7 points in March in seasonally adjusted terms. The result represented the strongest increase since August 2012 and overshot the 51.0 points the market had expected. The index remains above the 50-point threshold that separates expansion from contraction in the manufacturing sector.
March's better-than-expected result reflected an improvement in almost all sub-categories that comprise the index. Notable improvements were recorded in new orders and employment, which reached levels last seen 19 and 16 months ago, respectively. Production levels rose to the highest level in 14 months in March and the sub-index of inventories recorded a mild improvement over the previous month. Only supply deliveries deteriorated in March, remaining in contracting territory for a third consecutive month.
The Mexican manufacturing sector is strongly linked to the manufacturing sector in the United States, where the ISM manufacturing index also increased in March, coming in at 53.7 points (February: 53.2 points). March's increase confirms that the growth in the U.S. manufacturing sector is gradually gaining momentum, which bodes well for the Mexican manufacturing sector in the months ahead.
LatinFocus Consensus Forecast panelists expect Mexican industrial production to increase 3.3% in 2014, which is up 0.1 percentage points over the previous month's projection. Panelists see industrial production expanding 3.9% in 2015.
Author: Ricardo Aceves, Senior Economist