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Growth of manufacturing sector in Mexico remains subdued in August

Staff Writer | September 2, 2016
There was a marginal improvement in the operating conditions of the Mexican manufacturing sector during August, with a slight fall in output more than offset by positive growth in both new orders and employment.
Mexico manufacturing
LatAm   Markit Mexico Manufacturing PMI
However, cost pressures intensified and evidence of growing spare capacity was provided by a sharp and accelerated deterioration in backlogs. The headline Markit Mexico Manufacturing PMI is a composite single-figure indicator of manufacturing performance.

It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector. After accounting for seasonal factors, the headline PMI recorded a level of 50.9 in August.

That was up from 50.6 in July and above the 50.0 no-change mark for a thirty-fifth month in succession, but nonetheless represented only a marginal pace of expansion. New order levels continued to rise in August, with the rate of growth the best recorded for three months.

However, being well below the historical survey average, the pace of expansion was relatively underwhelming.

According to manufacturers, this was a key factor behind the slight drop in production during August, the second such decline in the past three months.

There was also some evidence of growing spare capacity in the sector, with manufacturers comfortably able to deal with both incoming and existing contracts as evidenced by a sharp drop in backlogs of work in August. Latest data showed that the monthly fall in work outstanding was the strongest recorded by the survey since July 2014.