MexECON Blog

February PMI Falls to 52.4

Mexico's February purchasing managers index (PMI) for the manufacturing sector edged down to 52.4, after revised readings of 52.5 in each of the previous two months.  According to the report, the slight decline in February came entirely from weaker figures for the heavily-weighted subindexes on production and new orders.  The subindex on production fell to 54.5 from 55.9 in January, while the subindex on new orders declined to 53.9 from 54.5.  The subindex on supplier deliveries was unchanged at 46.6.  On a more positive note, the subindex on inventories rose to 51.1 in February, and the subindex on employment rose to a 12-month high of 51.9.

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 best news in the February report was that the subindex on manufacturing employment has now risen for a third straight month.  That indicates the overall Mexican labor market may finally be starting to strengthen again.  As further evidence pointing in that direction, a separate report today showed a big jump in February consumer confidence.  If stronger hiring and rising optimism produce a sustained rebound in consumer spending, and if a nascent rebound in government spending and construction continue, the economy could find it easier to weather the recent softening in Mexican exports.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1402

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