MexECON Blog

July PMI Steady at 53.2

In a report last Friday, Mexico's July purchasing managers index (PMI) for the manufacturing sector came in at a seasonally-adjusted 53.2, unchanged from the revised June reading but up from the revised May reading of 51.9.  According to the report, from Banco de México and the official statistics agency INEGI, the subindex on production rose to 54.6 in July, while the subindex on manufacturing employment jumped to a 17-month high of 52.6.  In contrast, the subindex on new orders edged down to 55.0, and the subindex on inventories retreated slightly to 51.4.  The subindex on supplier deliveries fell to 50.2, reaching its lowest level since March.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for July therefore suggests Mexico's factory sector continues to grow broadly.  In fact, manufacturing in Mexico remains healthier than manufacturing in most other major countries, developed or emerging.  The good growth in the factory sector reflects both reaccelerating exports and robust domestic demand.  Mexico's economy is still at risk if the European debt crisis worsens further or the U.S. economy stumbles, but for now, it appears to have significant momentum.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1207

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