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Mexico: Surprise fall in PMI in June

July 1, 2014

The seasonally-adjusted manufacturing indicator published by the Mexican Institute of Finance Executives (IMEF) fell from a revised 52.6 points in May (previously reported: 52.2 points) to 50.3 points in June. June’s result caught market analysts by surprise, as they had expected the index to increase to 52.9 points. The index is now just barely above the 50-point threshold that separates expansion from contraction in the manufacturing sector, suggesting that growth in the sector is subdued.

June’s drop was broad-based as all sub-categories that compound the index registered lower readings than in the previous month. The new orders and inventories sub-categories inched down from the previous month’s readings. Production levels fell notably and the employment sub-index dipped into contraction territory. Supply deliveries continued to deteriorate in June and reached lows last seen in May 2013.

Some analysts doubt that the IMEF manufacturing PMI currently has the ability to completely explain actual variations in manufacturing output. In fact, some analysts see the U.S. ISM manufacturing headline indicator as a more reliable indicator of actual manufacturing output in Mexico. In June, the ISM manufacturing index inched down to 55.3 from 55.4 in May.

In this regard, the HSBC manufacturing PMI edged down from 51.9 in May to 51.8 in June. The moderation reflected slower growth in new export orders. In addition, HSBC pointed out that, although overall new business growth accelerated in June, the survey highlighted spare capacity in the manufacturing sector.

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. Panelists see industrial production expanding 3.9% in 2015.


Author:, Senior Economist

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Mexico PMI June 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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