MexECON Blog

October PMI Falls to 53.0

Mexico's October purchasing managers index (PMI) for manufacturing fell to a seasonally-adjusted 53.0, down from a revised reading of 53.3 in September but still higher than the reading of 52.4 in August.  According to the report, from Banco de México and the national statistics agency INEGI, the decline in October stemmed entirely from a drop in the subindex on factory production.  That subindex fell from 54.7 in September to 53.9 in October.  The subindex on supplier deliveries posted a good increase, from 49.2 to 49.9, but that subindex has little weight in the overall reading.  The other subindexes were all essentially flat in October.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for October therefore suggests Mexico's manufacturing sector is still growing broadly.  Nevertheless, the recent slowdown in U.S. economic growth will likely limit the demand for Mexican goods and services, putting a damper on future activity.  Some recent data suggests the U.S. slowdown may not be as bad as previously thought, but there is still likely to be significant near-term slowing in the Mexican factory sector and overall economy.  The heady days of the early part of Mexico's economic recovery are clearly over.

Patrick Fearon, CFA
Vice President, Fund Management

                       Mexico's Manufacturing PMI
               Seasonally Adjusted, >50 = Expansion
                Source:  Banco de México and INEGI
PMI 1110

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