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Growth in manufacturing sector in Mexico eases in February

Staff Writer | March 7, 2018
Growth in the Mexican manufacturing sector eased during February, with slower rises in production, new business and employment recorded.
manufacturing sector in Mexico
Mexico   IHS Markit Mexico Manufacturing PMI
Softer client demand meanwhile enabled firms to reduce their backlogs of work for the first time in four months.[break]

Nonetheless, companies remained optimistic that output would expand over the next year, which contributed to a sustained upturn in buying activity.

This in turn weighed on vendor performance, as suppliers faced rising demand and stock shortages, leading delivery times to increase to the greatest extent in nearly a year.

The headline seasonally adjusted IHS Markit Mexico Manufacturing PMITM — a composite indicator of manufacturing performance — fell from 52.6 in January to 51.6 in February.

This signalled a modest improvement in the health of the sector that was the weakest seen for four months.

Slower expansions in output, total new orders and employment underpinned the decline in the headline PMI figure.

Latest survey data indicated that manufacturing production in Mexico expanded again in February, albeit at a slower pace than recorded at the start of 2018.

Total new orders likewise increased in February, with the rate of growth also softening since January.

Where an increase in new business was noted, companies often reported on successful promotional activities.

Data indicated that new business wins were predominantly secured through domestic channels, as export sales contracted for the first time in seven months.

The sustained, albeit slower, expansions in production and new orders spurred firms to increase their staffing levels again in February.

However, mirroring the trend for output and new orders, the rate of job creation eased from that seen in January.

Softer client demand enabled businesses to tackle their work-in-hand during February, as backlogs declined for the first time in four months.

Meanwhile, shortages of certain products caused further hold-ups at suppliers, as average lead times lengthened for the seventh month in succession in February.

Moreover, vendor performance deteriorated at the quickest pace in 11 months.

At the same time, purchasing activity increased at a faster pace in February, as respondents aimed to accommodate a number of new projects.

In fact, growth in buying activity accelerated to a six-month high.

Greater raw material costs and currency volatility caused input prices to rise further in February.

Though the rate of inflation eased from January, it remained sharp.

In response to higher cost burdens, firms raised their output prices again in February.

However, the rate of inflation was softer than seen in January.