MexECON Blog

March PMI Falls to 52.1

Mexico's March purchasing managers index (PMI) for the manufacturing sector fell to a seasonally-adjusted 52.1, after revised readings of 52.9 in February and 53.3 in January.  The index now stands at its lowest since last October, though it is still at a historically high level.  According to the report, from Banco de México and the national statistics agency INEGI, four of the five subindexes weakened in March.  The biggest drop came in the heavily-weighted subindex on new orders, which fell to 52.4 from 54.9 the previous month.  The second-biggest drop came in the subindex on production, which declined to 52.7 from 53.9 the month before.  The only subindex to post an increase in March was the one on supplier deliveries, which rose to 51.7.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  Therefore, in spite of the two straight months of declines in the index in February and March, today's report suggests Mexico's factory sector is still growing quite broadly.  In fact, the growth suggested by today's report may be more sustainable than the extraordinary activity shown at the beginning of the year.  With exports growing robustly, and domestic demand starting to pick up, Mexico's manufacturing sector shows every sign of continued growth in the near term.  The main near-term risks are probably that the strong peso could start to weigh on exports or political unrest in the Arab world could start to undermine confidence.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexico's Manufacturing PMI
                                 Seasonally Adjusted, >50 = Expansion
                                   Source:  INEGI and Banco de México
PMI 1103

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