MexECON Blog

October PMI Falls to 51.9

Mexico's October purchasing managers index (PMI) for the manufacturing sector fell back to a seasonally-adjusted 51.9, after readings of 52.4 in September, 52.2 in August, and 51.6 in July.  According to the report, the decline in October reflected decreases in four of the five subindexes.  The heavily-weighted subindex on new orders fell back to 54.2, compared with 55.2 in September and 54.1 in August.  The subindex on production fell to a four-month low of 53.7, and the subindex on inventories fell to a eight-month low of 51.2.  The subindex on supplier deliveries declined modestly to 44.9.  In contrast, the subindex on employment rose to 51.8, reaching its highest level since April.

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 the Mexican manufacturing sector continues to grow decently.  The sector has been benefitting from both a rebound in Mexican exports and a recovery in some aspects of domestic demand, though the late-summer slowdown in several key developed economies may finally have cooled activity a bit last month.  The most encouraging aspect of today's report is the continued acceleration in manufacturing employment.  A relatively soft labor market and stagnant wages have been weighing on Mexican economic growth, but stronger hiring in industrial sectors such as manufacturing and construction could potentially eliminate that problem.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1410

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