Mexico's December purchasing managers index (PMI) for the
manufacturing sector fell to a seasonally-adjusted 52.0, compared
with revised figures of 52.3 in November and 52.1 in October.
According to the report, the modest decline in December reflected
lower readings for the heavily-weighted subindexes on new orders
and production. The subindex on new orders edged down to 54.4
from 54.6 in November. The subindex on production fell to
53.7 from 55.1. In contrast, the subindexes on factory
employment, supplier deliveries, and inventories all posted modest
gains in December.
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. The index
is now at its lowest level since last July, but it still high
enough to suggest that the Mexican manufacturing sector is
continuing to grow at a modest pace, just as it has for the last
year. The sector continues to benefit from stronger demand
from the United States and an ongoing rebound in important parts of
the domestic economy. Importantly, the continued expansion in
factory employment suggests that the Mexican labor market is likely
to keep strengthening gradually, which should eventually help
prompt stronger consumer confidence and spending. In turn,
that would help solidify Mexican economic growth.
Patrick Fearon, CFA
Vice President, Fund Management