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Manufacturing PMI signals slowest growth in Mexico since October 2013

Staff Writer | January 3, 2017
Mexican manufacturers pointed to another growth slowdown in December, with business conditions improving at the weakest pace for just over three years.
Mexico Manufacturing
Mexican economy   Markit Mexico Manufacturing PMI
This largely reflected subdued demand patterns at the end of 2016, particularly in domestic markets. New business growth was the softest since September 2013, which resulted in slower job creation and a fall in production for the first time since August.

Meanwhile, exchange rate depreciation continued to push up imported raw material prices in December. Reflecting this, input cost inflation accelerated to one of the highest levels seen over the past four-and-a-half years.

Adjusted for seasonal influences, the Markit Mexico Manufacturing PMI registered 50.2 in December, down from 51.1 in November and only fractionally above the neutral 50.0 threshold.

The latest reading signalled the weakest upturn in manufacturing conditions since October 2013, largely reflecting slower new business growth and a slight fall in production volumes.

December data signalled renewed decline in manufacturing output, following three months of sustained expansion. Although only marginal, the fall in production volumes was the most marked since late-2013.

At the same time, new order growth moderated to its weakest for over three years, which survey respondents linked to softer domestic demand conditions and heightened economic uncertainty.

New export sales increased again in December, thereby extending the current period of growth to five months. Some manufacturers commented on greater sales to clients across South America.

Despite sign of fragile client spending, manufacturers continued to expand operating capacity and hire additional staff in December.

The rate of job creation remained broadly in line with the average seen during the first half of 2016. Efforts to boost capacity in turn contributed to a reduction in backlogs of work for the seventh month running.