MexECON Blog

PMI Falls Again in March

Mexico's March purchasing managers index (PMI) for the manufacturing sector declined to a seasonally-adjusted 52.2, down from a revised 52.6 in February and an unrevised 53.1 in January.  According to the report, the fall in March reflected decreases in three of the five subindexes.  The subindex on production fell sharply to 52.3, reaching its lowest level since the summer of 2013.  The subindex on new orders was better behaved, edging down slightly to 54.0, but that was still its lowest level since last July.  The subindex on supplier deliveries fell to 46.1.  In contrast, the subindex on employment rose to 51.8, and the subindex on inventories rose to 53.0.

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 declines over the last two months, the index suggests the Mexican factory sector is still growing about as broadly as it has been since the beginning of 2014.  Mexican exports remain relatively strong, driven by continued growth in the U.S. economy and the low value of the peso.  In addition, construction and other forms of private investment in Mexican continue to trend upward.  Because U.S. inventories have gotten high, there is a chance that demand from north of the border will be weak in the coming months, which could slow the Mexican factory sector further.  Once U.S. inventories are brought back in line, however, there is a good chance that Mexican manufacturers will see increased activity again.

Patrick Fearon, CFA
Portfolio Manager

PMI 1503

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