MexECON Blog

PMI Continues to Rebound

Mexico's July purchasing managers index for the manufacturing sector rose to a seasonally-adjusted 52.7, up from 52.5 in June and a revised 52.4 in May.  The PMI has now risen for three straight months, leaving it at its highest level since January.  According to the report, the rise in June came entirely from two of the five subindexes.  The heavily-weighted subindex on new orders rose to 54.7, reaching its highest level in ten months.  The heavily-weighted subindex on production jumped to a five-month high of 54.6.  In contrast, the subindex on inventories fell to 52.7 in June, while the subindex on employment edged down to 52.3.  The June subindex on supplier deliveries dropped to 45.8.

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 soft spot during the spring.  The rebound in the subindex over the last several months provides welcome evidence that manufacturers have found their footing again in the midst of stabilizing exports and construction, as well as continued growth in consumer spending.  That should allow the overall Mexican economy to keep growing in the coming months, though there is still some risk once U.S. interest rates start rising.

Patrick Fearon, CFA
Portfolio Manager

PMI 1507

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