MexECON Blog

February PMI Falls to 53.6

Mexico's February purchasing managers index (PMI) for the manufacturing sector fell to a seasonally-adjusted 53.6, slightly below the revised reading of 53.7 in January but still the second highest level since 2006.  According to the report, from Banco de México and the national statistics agency INEGI, all five subindexes posted good readings in February, led by increased readings for new orders and production.  The only subindex to post a decline in February was the one on supplier deliveries, which fell to 50.5.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  Therefore, in spite of the slight decline in February, today's report suggests Mexico's factory sector remains quite strong, with its growth very broadly based.  The growth stems primarily from booming exports, but domestic demand for the country's manufactured goods is also starting to rise more noticeably.  Based on recent indicators, such as a reacceleration in exports and a further decline in unemployment during January, it appears that Mexico's factory sector will continue to grow strongly in the near term.  The main near-term risks are probably that the strong peso could start to slow exports or political unrest in the Arab world could start to weigh on confidence.

Patrick Fearon, CFA
Vice President, Fund Management

                                           Mexico's Manufacturing PMI
                                   Seasonally Adjusted, >50 = Expansion
                                     Source:  INEGI and Banco de México
PMI 1102

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