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