MexECON Blog

October PMI Falls to 52.8

Mexico's October purchasing managers index (PMI) for the manufacturing sector declined to a seasonally-adjusted 52.8, after revised readings of 54.3 in September and 53.1 in August.  The reading for October was the lowest since May, but it was virtually identical to the average reading of 52.9 in the previous 12 months.  According to the report, all five subindexes posted decreases last month.  Among the most heavily-weighted, the subindex on new orders fell to 54.3 from 55.8 in September, and the subindex on production fell to 53.9 from 56.0 in the previous month.  The subindex on employment edged down to 52.8, while the subindex on inventories declined slightly to 52.7.  The subindex on supplier deliveries dropped to 49.8.  The report was released today by Banco de México and the official statistics agency INEGI.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for October therefore suggests Mexico's factory sector continues to grow broadly.  In fact, Mexico's PMI is one of the highest among the world's major economies, illustrating the relative strength of the North American economy compared with Europe and Asia.  Even though slow activity in those regions is weighing on the U.S. economy, the improvements in housing and employment north of the border suggest Mexico will continue to see rising exports and expanding manufacturing activity, though prospects would darken considerably if the European debt crisis worsens dramatically or if U.S. politicians fail to head off a scheduled fiscal tightening at the end of the year.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1210

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