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Mexico: PMI rebounds in August, returns to expansion territory

September 1, 2014

The seasonally-adjusted manufacturing indicator published by the Mexican Institute of Finance Executives (IMEF) rose from a revised 49.4 points in July (previously reported: 49.1 points) to 51.6 points in August. The reading, which overshot the 51.2 points the market had expected, returned above the 50-point threshold that separates expansion from contraction in manufacturing.

The indicator in August showed that details were somewhat mixed, but the net effect was positive. New orders in August reached a five-month high and production levels, employment as well as inventories rose to the highest point in three months. Conversely, supplier deliveries plunged to lowest level in nearly two years in August.

Analysts recognized that the rebound in the IMEF manufacturing indicator in August helped to close the gap in the degree of divergence between the equivalent index in the United States and with respect to hard data on the domestic manufacturing sector. In August, the ISM manufacturing index rose to 59.0 from 57.1 in July.

In the same line, the Purchasing Managers’ Index (PMI) elaborated by HSBC rose from 51.5 in July to 52.1 in August. According to HSBC, August’s data reflected a solid improvement in overall business conditions in the manufacturing sector. The reading in August reflected an increase in production levels. In addition, HSBC stated that activity in new businesses continued in August, although at a softer pace, and employment rebounded across the manufacturing sector in August.

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 August 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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