MexECON Blog

August PMI Falls to 53.0

Mexico's August purchasing managers index (PMI) for the manufacturing sector fell to a seasonally-adjusted 53.0, after readings of 53.2 in each of the previous two months.  According to the report, from Banco de México and the official statistics agency INEGI, the decline in August reflected modest decreases in four of the five subindexes.  The heavily-weighted subindex on new orders edged down to 54.7 from 54.8 in July, while the subindex on production fell to 53.6 from 54.7 in the previous month.  The subindex on manufacturing employment declined to 52.1, while the subindex on supplier deliveries declined to 49.4.  In contrast, the subindex on inventories rose to 52.3 from 51.6 in July.  The subindex on inventories is now at its best level since October 2011.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  The report for August therefore suggests Mexico's factory sector not only continues to grow broadly, but it is also far outperforming the factory sectors in most of the other major economies around the world.  Compared with Mexico's reading of 53.0, for example, the August PMI for the United States fell to 49.6, and the reading for the European Union came in at 45.1.  The August PMI for China fell to 47.6.  Mexico's economy is being driven by reaccelerating exports and robust domestic demand.  Those positives could be offset if the European debt crisis worsens again and contagion strikes beyond the Continent's borders.  For the moment, however, Mexico remains a relative bright spot in the world economy.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1208 B

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