MexECON Blog

March PMI Rises to 52.7

Mexico's March purchasing managers index for manufacturing (PMI) rose to a seasonally-adjusted 52.7, after dipping to a revised 51.5 in February.  The index is now at its highest since December.  According to the report, from Banco de México and the official statistics agency INEGI, the rebound in March came mostly from a jump in the subindex on new orders.  That subindex rose to 54.0 from 52.7 in February.  In addition, the subindex on employment jumped to a 13-month high of 52.4, and the subindex on inventories rose to a 5-month high of 51.7.  In contrast, the subindex on production declined to 52.4 from 54.2 in the previous month, and the subindex on supplier deliveries fell to 49.5 from 50.1.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for March therefore suggests Mexico's manufacturing sector is growing broadly.  U.S. manufacturing also reaccelerated in March, demonstrating that North America as a whole is now one of the brightest spots in the global economic landscape.  Some observers are skeptical that the North American economy can improve further.  They argue that the recent U.S. employment gains are out of sync with the slow rate of output growth.  However, I believe the job growth is real, probably reflecting a rise in new business formation that is not yet showing up in the other data.  If so, rising U.S. demand will likely bolster the demand for Mexican exports, and U.S. capital will probably continue to fuel investment south of the border.  Mexico's manufacturing sector is therefore likely to keep growing in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1203

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