MexECON Blog

April PMI Rises to 53.9

Mexico's April purchasing managers index for manufacturing (PMI) rose to a seasonally-adjusted 53.9, after a revised 53.0 in March and 51.5 in February.  According to the report, from Banco de México and the official statistics agency INEGI, the rise in April came from increases in three of the five subindexes.  The subindex on new orders rose to 56.0 in April, marking its second straight monthly gain and bringing it to its highest level since last July.  The subindex on production rose to 55.1 from 52.5 in March, and the subindex on supplier deliveries rose to 50.4 from 49.5.  In contrast, the subindex on manufacturing employment fell slightly to 52.4, and the subindex on inventories fell moderately to 51.1.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for April therefore suggests Mexico's factory sector is once again growing very broadly.  In fact, the 53.9 reading in April was not far below the cycle peak of 54.8 in mid-2011.  The rise in Mexico's PMI was consistent with the good increase in the U.S. PMI released earlier this week.  Because Mexico is so dependent on exports to the United States, the apparent rebound in U.S. manufacturing is especially positive for the country.  Moreover, other data today suggested the rise in U.S. initial jobless claims over the last month could partly reflect problems with the seasonal adjustment process around the Easter holiday.  In other words, the U.S. labor market may be stronger than previously thought, and overall U.S. economic growth may not have softened as much as it seemed this spring.  That suggests Mexican exports could continue to reaccelerate, driving increased manufacturing activity in Mexico.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1204

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