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Manufacturing growth in Mexico gathers momentum in January

Staff Writer | February 5, 2018
Manufacturers in Mexico started 2018 on a solid footing, with strong inflows of new work boosting output growth and job creation.
Manufacturing growth in Mexico
Mexico   IHS Markit Mexico Manufacturing PMI
Additional inputs were purchased as companies sought to rebuild their inventories amid efforts to fulfil contract obligations.

Meanwhile, exchange rate movements exerted upward pressures on cost burdens, resulting in a stronger increase in selling prices.

Optimism was sustained, though the level of positive sentiment dipped to a one-year low.

Rising from 51.7 in December to 52.6 in January, the seasonally adjusted IHS Markit Mexico Manufacturing PMI™ pointed to a further strengthening of business conditions in the sector.

The headline figure was at a four-month high, reflecting stronger contributions from all of its five sub-components: output, new orders, stocks of purchases, employment and delivery times (inverted).

New orders continued to recover from the earthquake-related contraction noted last October, rising for the third month in succession during January.

According to businesses the upturn was underpinned by the launch of new products and robust demand.

Moreover, the rate of growth quickened from December and was marked overall.

The increase in total new work was supported by growth of export sales.

Despite picking up since December, the rate of expansion in new export orders was modest.

IHS Markit Mexico Manufacturing PMI The buoyant demand environment encouraged goods producers to scale up output, with the pace of growth the strongest in the current three-month sequence of expansion.

Part of this output was placed into manufacturers’ inventories, as signalled by a marked and accelerated increase in stocks of finished goods.

The rate of accumulation was in fact the steepest since the first month of data collection (April 2011).

Similarly, holdings of inputs increased further, and at a quicker pace.

This was due to a sustained upturn in buying levels.

Subsequently, pressures on supply chains were evident, with delivery times lengthening for the sixth month in succession.

Jobs were created in the manufacturing industry in January.

Moreover, the rate of employment growth reached a five-month high and outpaced its longrun average.

Input costs increased at a sharper rate amid reports of higher prices paid for imported items and shipping.

Thus, output charges were raised to the greatest extent since June 2017.