MexECON Blog

May PMI Falls to 52.7

Mexico's May purchasing managers index (PMI) for the manufacturing sector fell to a seasonally-adjusted 52.7, down from the revised 52.9 in April but still above the 52.5 reading in March.  The pullback in May reflected declines in four of the five subindexes, including the heavily-weighted subindexes on production and new orders.  The subindex on production fell to 53.8, compared with 55.2 in April and 53.4 in March.  The subindex on new orders declined only slightly to 54.2 from 54.5 in the previous month.  The May subindex on inventories edged down to 52.6, and the subindex on employment decreased to 51.0.  In contrast, the subindex on supplier deliveries rose in May, reaching 47.3.

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.  In spite of the pullback in May, the index suggests Mexico's factory sector is still growing broadly again after a weak spot in mid-2013.  That probably reflects the recent upswing in exports, as the U.S. economy regains its footing.  If the U.S. economy keeps accelerating as many observers expect, the Mexican factory sector could keep growing well.  There have also been some positive signs for domestic demand in Mexico.  Those improvements have been too small and tentative to contribute much to the factory sector so far, but if retail spending and other aspects of domestic demand solidify soon, the manufacturing sector could improve further. 

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1405

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