MexECON Blog

September PMI Jumps to 54.4

Mexico's September purchasing managers index (PMI) for the manufacturing sector jumped to a seasonally-adjusted 54.4, after revised readings of 53.2 in August and 53.3 in July.  With the rise in September, the index has now matched its cycle high in July 2011.  According to the report, from Banco de México and the official statistics agency INEGI, the rise in September reflected increases in four of the five subindexes.  The subindex on production jumped to 56.2 from 53.9 in August, while the subindex on new orders rose to 55.9 from 54.8.  The subindex on employment rose slightly to 52.5, while the subindex on supplier deliveries increased to 51.7.  The only subindex that did not rise in September was the one on inventories.  That subindex was unchanged at 52.7.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for September therefore suggests Mexico's factory sector is now growing as broadly as it has at any point in the country's current economic upswing.  The rise in Mexico's PMI during September was consistent with the rebound in the U.S. index for the same month, and taken together, they illustrate the relative robustness of the North American economy.  In contrast, most indicators from Europe and Asia point to weakening activity.  If the U.S. economy continues to grow, albeit slowly, and if the European debt crisis does not worsen substantially, Mexican exports and domestic demand will probably continue to trend upward, and the country's manufacturing activity is likely to keep growing broadly.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1209

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