MexECON Blog

PMI Falls Further

Mexico's April purchasing managers index (PMI) for the manufacturing sector fell to a seasonally-adjusted 52.1, compared with revised readings of 52.3 in March, 52.6 in February, and 53.0 in January.  According to the report, the fall in April stemmed entirely from modest declines in two of the five subindexes.  The heavily-weighted subindex on new orders fell to 54.1 from 54.3 previously, while the subindex on employment fell to 51.6 from 51.7.  In contrast, the April subindex on production rose to 53.6.  The subindex on inventories edged up to 53.2, and the subindex on supplier deliveries rose to 46.6.

The report was released on 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 the Mexican factory sector is still growing fairly broadly, though it certainly has lost some steam since the beginning of the year.  Mexican exports remain relatively high, but they have softened in the face of weaker demand north of the border.  Commercial and residential construction have also softened recently, presenting another headwind.  This adds to a range of evidence suggesting that the Mexican economy has entered a temporary soft spot.

Patrick Fearon, CFA
Portfolio Manager

PMI 1504

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