MexECON Blog

December PMI Steady at 52.4

Mexico's December purchasing managers index (PMI) for the manufacturing sector came in at a seasonally-adjusted 52.4, equal to the level in November but significantly stronger than the 51.2 reading in October.  The PMI in the last two months of the year was the highest since May.  According to the report, three of the five subindexes posted increases in December.  The subindex on production rose to 54.8 from 54.4 in the previous month, and the subindex on inventories increased to 53.3 from 53.1.  The December subindex on employment edged up to 51.2 from 51.1 in November.  Offsetting these increases, the heavily-weighted subindex on new orders pulled back to 53.8 in December from 54.2 in November, and the subindex on supplier deliveries declined to 45.6 from 46.2.

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 is growing broadly again after a weak spot in mid-2013.  The strength in the PMI at year's end provides further evidence that the Mexican economy is accelerating again.  Nevertheless, it is still too early to discount the continuing negative impacts of tight government spending, weak construction, and signs of tepid consumer demand.  Those factors could limit the improvement in the economy in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1312

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