Mexico's November purchasing managers index (PMI) for
manufacturing rose to a seasonally-adjusted 52.3, after upwardly
revised readings of 51.5 in October and 51.4 in September.
The index is now at its highest level since June, though it is
still some distance from its cycle high of 53.4 in April.
According to the report, from Banco de México and the national
statistics agency INEGI, the heavily weighted subindexes on new
orders and production both rose for a second straight time in
November, reaching multi-month highs. The subindexes on
employment and supplier deliveries posted slight declines.
The subindex on inventories was unchanged.
Comment: The PMI is designed so
that readings over 50 indicate expanding activity, so today's
report suggests the Mexican factory sector is growing at a good
pace. In fact, the sector appears to be accelerating again,
after a substantial slowdown during the summer. The Mexican
economy clearly has some momentum in it. Nevertheless, the
economy is likely to slow to a more sustainable pace in the coming
months. One reason is that U.S. demand is likely to slow, as
inventory rebuilding falls back, the effect of fiscal stimulus
starts to wane, and consumers continue to husband their resources
and pay down debt. In addition, the strong peso is likely to
be a headwind for Mexican exports. Mexico's economy is still
likely to grow well in the near term, but the pace of growth is
expected to become more moderate.
Patrick Fearon, CFA
Vice President, Fund Management
Mexico's Manufacturing PMI
Seasonally Adjusted, >50.0 = Expansion
Source: INEGI and Banco de México