MexECON Blog

September PMI Rises to 51.3

Mexico's September purchasing managers index for the manufacturing sector rose to a seasonally-adjusted 51.3, after a revised 50.8 in August and 51.0 in both July and June.  Prior to that, the PMI stood at 52.5 in May.  The rise in September reflected improvements in all five subindexes.  The heavily-weighted subindex on new orders increased to 53.0 from 52.4 in August, and the subindex on production rose to 52.3 from 51.8.  The subindex on employment edged up to 51.2 in September, and the subindex on inventories jumped to an eight-month high of 53.2.  The subindex on supplier deliveries also rose strongly, but it remained relatively weak at 47.2.

The report was released today by Banco de México and the official statistics agency INEGI.

Comment:  The PMI is designed so that readings over 50 point to expanding activity.  At its current level, the index suggests Mexico's factory sector has rebounded a bit but is still growing rather narrowly.  Exports have been reaccelerating modestly for the last few months, which has probably helped boost some manufacturers.  However, the rise in sales abroad is still not strong.  The government shutdown in the United States could also reverse the recent gains in the coming months.  Meanwhile, Mexico's domestic demand is in the doldrums. In this environment, it is unclear whether Mexico's factory sector can continue to strengthen.  The Mexican economy therefore remains at risk of slipping into recession.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1309

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