MexECON Blog

December PMI Falls to 52.1

Mexico's December purchasing managers index (PMI) for the manufacturing sector fell to a seasonally-adjusted 52.1, below the reading of 52.3 in November but still above the reading of 51.5 in October.  According to the report, from Banco de México and the national statistics agency INEGI, the heavily-weighted subindex on new orders was flat at 53.8 in December, while the subindexes on production, employment, and supplier deliveries rose only slightly.  The main reason for the pullback in the overall index was that the subindex on inventories fell sharply, from 52.3 in November to 49.4 in December.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  Therefore, today's report suggests the Mexican factory sector is still growing at a good pace.  The strong activity in Mexican manufacturing primarily reflects rising exports to the United States, but domestic consumption demand is also starting to kick in, and there are signs that investment is poised to rise again.  Nevertheless, the initial, strong-growth phase of Mexico's economic recovery has already passed.  Growth in Mexico is likely to continue in 2011, but at a more moderate pace than in 2010.

Patrick Fearon, CFA
Vice President, Fund Management

                                          Mexico's Manufacturing PMI
                                   Seasonally Adjusted, >50 = Expansion
                                     Source:  INEGI and Banco de México
PMI 1012

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