Today, the MexECON blog initiates coverage of Mexico's official
purchasing managers index (PMI) for the manufacturing sector.
Because the PMI is released almost immediately after the close of
the month, it offers a nearly real-time view of activity in the
Mexican factory sector. The index is designed so that
readings over 50.0 indicate expansion. According to the
latest report, released on Friday by Banco de México and the
official statistics agency INEGI, Mexico's September manufacturing
PMI fell to 51.0, down from 51.6 in August and 52.0 in July.
The index has now fallen for five straight months, and it stands at
its lowest level in one year. In September, all five
subindexes retreated, with the subindex on supplier deliveries
falling to 48.7 and the subindex on employment falling to 47.7.
Comment: Mexico's second-quarter
economic growth was extremely strong, and data from the third
quarter have been positive. Nevertheless, the five straight
declines in the PMI serve to underscore the possibility that
Mexican growth could soon moderate or even stall. As has been
noted often on this blog, Mexico's current economic rebound is
uncomfortably dependent on rising exports to the United States -
particularly exports of trucks, autos and auto parts. If U.S.
inventory rebuilding continues to slow and U.S. corporate and
consumer demand fail to accelerate soon, Mexican exports could
stall before other sectors of the economy are growing fast enough
to take up the slack. Fortunately, the September PMI shows
manufacturing orders are still growing, and that means the day of
reckoning is not necessarily at hand right now. Still,
Mexican growth looks vulnerable to a slowdown in the coming
Patrick Fearon, CFA
Vice President, Fund Management
Mexico's Manufacturing PMI
Seasonally Adjusted, >50.0 = Expansion
Source: INEGI and Banco de México