MexECON Blog

March PMI Falls to 52.1

Mexico's March purchasing managers index (PMI) for the manufacturing sector fell slightly to a seasonally-adjusted 52.1, after revised readings of 52.2 in February and 52.4 in each of the three months before that.  The decrease in March stemmed entirely from a fall in the subindex on production.  That subindex declined to 52.9 from 54.2 in February and 55.8 in January.  On a more positive note, the March subindex on manufacturing employment was steady at 51.6, while the subindex on new orders rose to 54.4.  The subindex on supplier deliveries increased to a 13-month high of 47.4, and the subindex on inventories jumped to 52.1.

The report was released Wednesday 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 fairly broadly again after a weak spot in mid-2013.  One positive development for Mexican manufacturers has been that the country's exports rebounded in February, and many observers have begun to expect U.S. demand to strengthen into the spring after bad weather disrupted business during the winter.  Nevertheless, domestic demand in Mexico continues to face big challenges.  Residential construction is in a deep freeze, public works activity is sluggish, and consumer demand is tepid.  Those problems may limit how much the manufacturing sector can grow in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1403

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