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