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Business conditions remain subdued in Mexico

Staff Writer | March 3, 2017
February data indicated that challenging business conditions persisted across the Mexican manufacturing sector.
Mexican manufacturing
Mexico   Markit Mexico Manufacturing PMI
New business rose at the second-slowest pace since September 2013.

Subdued demand weighed on production volumes and input buying, which in turn contributed to the quickest reduction in stocks of purchases for threeand-a-half years.

Meanwhile, exchange rate depreciation led to another strong rise in average cost burdens during February.

Moreover, manufacturing companies indicated that intense pressure on margins resulted in the steepest rate of factory gate price inflation for five years.

At 50.6 in February, the seasonally adjusted Markit Mexico Manufacturing PMI™ – a composite indicator of manufacturing performance – dropped from 50.8 in January and was close to the threeyear low seen at the end of 2016 (50.2).

On average in Q1 2017 so far, the headline index is on track to record the weakest quarterly manufacturing performance since Q3 2013.

Mexican manufacturers signalled that output levels were broadly unchanged in February, which contrasted with the marginal expansion seen in the previous month.

Survey respondents noted that weaker new business growth and heightened uncertainty about the economic outlook had acted as a brake on production.

New business growth was only marginal in February, despite a boost from the strongest rate of export sales growth since January 2016.

Manufacturers noted that fragile business conditions in domestic markets had weighed on overall new order growth during the latest survey period.

Subdued demand patterns resulted in a further slowdown in employment growth across the manufacturing sector.

The latest rise in payroll numbers was the weakest since August 2016.

February data also suggested a general lack of pressure on operating capacity, with backlogs of work broadly unchanged over the month.


 

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