MexECON Blog

August PMI Rises to 52.0

Mexico's August purchasing managers index (PMI) for the manufacturing sector rose to a seasonally-adjusted 52.0, after revised readings of 51.5 in July, 51.8 in June, and 52.5 in May.  According to the report, the rebound in August reflected increases in three of the five subindexes.  The subindex on production jumped to a four-month high of 54.4, compared with 52.9 in July, and the subindex on new orders rose to 53.7, up from 53.0 in the previous month.  The subindex on inventories rose to 53.2.  In contrast, the August subindex on employment edged down to 51.3 from 51.5.  The subindex on supplier deliveries dropped to 44.7, reaching its lowest level in more than seven years.

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 still growing relatively broadly.  That probably stems in large part from the recent rebound in Mexican exports, but some aspects of domestic demand have also been rising again.  In particular, it appears that the construction sector is finally expanding again after a long period of extreme weakness.  The main economic headwind is that the country's relatively soft labor market continues to weigh on consumer spending, and that could limit the factory sector and overall economic growth in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

PMI 1408

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