MexECON Blog

PMI Shows Continued Rebound in Manufacturing

Mexico's June purchasing managers index (PMI) for the manufacturing sector rose to a seasonally-adjusted 52.5, up from the revised readings of 52.3 in May and 52.1 in April.  According to the report, the rise in June came in large part from the heavily-weighted subindex on new orders.  That subindex rose to 54.3, reaching its highest level since March.  The subindex on employment increased to 52.3, and the subindex on supplier deliveries improved to 46.0.  In contrast, the June subindex on production declined to 53.1, while the subindex on inventories slumped to a four-month low of 52.7.

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.  At its current level, the index suggests the Mexican factory sector is growing broadly again, after a modest soft spot during the spring.  The slowdown during the spring reflected a lull in exports and a pullback in construction.  More recent data seem to point to a reacceleration in economic growth north of the border, stronger domestic construction, and increased hiring that should buoy continued growth in consumer spending.  I suspect those factors will continue to bolster Mexican manufacturers in the months ahead.  The overall outlook for the Mexican economy in the near term therefore remains significantly better than the outlook for most other major emerging markets.

Patrick Fearon, CFA
Portfolio Manager

PMI 1506

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