MexECON Blog

PMI Rebounds Partially in May

Mexico's May purchasing managers index (PMI) for the manufacturing sector rose to a seasonally-adjusted 52.4, compared with unrevised readings of 52.1 in April and 52.3 in March.  According to the report, the partial rebound in May reflected increases in four of the five subdinexes.  The heavily-weighted subindex on production rose to 54.4, and the subindex on inventories jumped to a record high of 54.6.  The subindex on new orders rose to 54.0, and the subindex on employment rose to 52.1.  In contrast, the subindex on supplier deliveries declined to a seven-month low of 45.2.

The report was released earlier this month 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 not as broadly as at the beginning of the year.  The main reasons for the softening seems to be that exports have hit a lull and the recent recovery in Mexican construction has slowed.  Nevertheless, those headwinds may well prove temporary.  With the recent indications of renewed economic strength north of the border and a stronger labor market at home, there is a decent chance that Mexican manufacturing will reaccelerate further in the coming months. 

Patrick Fearon, CFA
Portfolio Manager

PMI 1505

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