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