Mexico: PMIs send mixed signals in March
April 3, 2017
The seasonally-adjusted manufacturing indicator produced by the Mexican Institute of Financial Executives (IMEF) fell further in March and reached a low that was last seen in April 2009. The indicator fell from 46.3 in February to 45.9 in March and fell short of the 46.0 the markets had expected. The indicator produced by IMEF continues to suggest a hefty deterioration in the sector’s activity, since it declined further below the 50-threshold.
Most of the details were equally discouraging. Manufacturing production fell to the lowest level in nearly seven years, and employment and supply delivery times plummeted at an equally sharp rate to production. That said, new orders saw a mild improvement in March and inventories fell to the lowest level in over a decade, which suggests that strong domestic demand is depleting inventories, while an improvement in new orders signals an increase in production in the coming months.
Meanwhile, another indicator that measures performance in Mexico’s manufacturing sector rose to a five-month high in March. The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit rose from 50.6 in February to 51.5, thereby remaining above the 50-threshold.
The indicator suggested that growth in Mexico’s manufacturing sector was helped by a jump in output and new orders, the latter recording the highest level in six months. However, IHS Markit noted that job creation slowed for a second consecutive month, with respondents signaling that the slowdown in employment reflected pressure in businesses operating margins and heightened uncertainty regarding the economic outlook.
Author: Ricardo Aceves, Senior Economist