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