MexECON Blog

November PMI Rises to 52.3

Mexico's November purchasing managers index (PMI) for the manufacturing sector rose to a seasonally-adjusted 52.3, significantly stronger than the revised readings of 51.2 in both October and September and 50.8 in August.  The index now stands at its highest level since May.  The rise in November reflected increases in each of the five subindexes.  The heavily-weighted subindex on new orders jumped to 54.2 in November from 51.9 in October, while the subindex on production rose to 54.2 from 53.3.  The subindex on inventories posted a healthy gain to 53.2, while the subindex on employment rose slightly to 51.2.  The subindex on supplier deliveries also posted an increase, though it remained relatively weak at 46.7.

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 is growing broadly again after hitting a weak spot in mid-2013.  The rebound in the PMI is consistent with other recent data suggesting that at least parts of the Mexican economy are recovering from their slowdown earlier in the year.  For example, Mexican gross domestic product (GDP) returned to growth in the third quarter after declining in the second quarter.  Exports have started to firm, and unemployment is again trending downward.  Nevertheless, the PMI is still weaker than it was last year at this time, and it is not yet clear whether it will rebound much further.  The Mexican economy is still facing headwinds from tight government spending, weak construction, and signs of tepid consumer demand.  Until those issues are resolved, it is not clear whether Mexican manufacturing can grow much faster.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1311

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