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Stronger inflows of new work in Mexico boost output growth

Manufacturing Mexico
Mexico   IHS Markit Mexico Manufacturing PMI

Manufacturing conditions in Mexico continued to improve at the end of the third quarter, as a marked and accelerated expansion in factory orders underpinned a robust upturn in output.


Jobs were created over the month, while firms also purchased greater quantities of inputs.

Meanwhile, low stock levels at suppliers, combined with higher prices paid for imported materials, caused a sharper increase in input costs.

In turn, goods producers raised their own selling prices again.

Rising from 52.2 in August to 52.8 in September, the headline seasonally adjusted IHS Markit Mexico Manufacturing PMI pointed to the strongest improvement in the health of the sector in nearly one-and-a-half years.

Furthermore the PMI reading over Q3 as a whole was the highest since Q2 2016.

Companies benefited from an accelerated upswing in new projects, with overall growth of new orders picking up to the quickest since May 2016.

Demand was stronger in the domestic and external markets in September, though total new work rose at a faster rate than new business from abroad.

In response to the improved demand environment, Mexican manufacturers scaled up output for the fifth month in succession.

Production rose at a solid pace that was the most pronounced in 16 months.

To cope with greater workloads, some firms hired extra staff in September.

The overall rate of job creation was, however, modest and the slowest since May.

The rise in employment was also insufficient to prevent backlogs from being accumulated again.

September data pointed to a fifth consecutive month-on-month rise in quantities of purchases, with the rate of expansion being solid and above the average over this sequence.

 

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