POST Online Media Lite Edition


Mexican manufacturing deteriorated in July

Staff writer |
For the first time since April 2011, Mexican manufacturing business conditions deteriorated in July, albeit only marginally: PMI fell to 49.7.

Article continues below

The headline figure derived from the survey is the Manufacturing Purchasing Managers' Index (PMI). Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 signal a deterioration.

Output contracted over the month, partly reflecting a stagnant trend for new orders, and this in turn led to little-change in employment. Firms meanwhile attempted to win new business by offering price discounts to clients, despite the rate of input cost inflation quickening to a five-month high.

At 49.7 in July, down from 51.3 in June, the seasonally adjusted HSBC Mexico Manufacturing PMI fell below the 50.0 no-change mark, signalling a deterioration in operating conditions. This was the first sub-50 reading in the 28-month series history, but the headline index was consistent with only a marginal contraction.

In July, the volume of new orders received by Mexican manufacturers was broadly the same as in June. The stagnant trend contrasted with growth one month previously, and partly reflected weak client demand. Notably, new export orders fell solidly and for the third month running.

Reflective of the easing new order trend, output fell modestly in July, ending a sequence of growth seen in each month since data collection began in April 2011. Backlogs of work also declined, and at the strongest rate since last September.

"The HSBC Mexico Manufacturing PMI fell to 49.7 in July from 51.3 in June. Since the series began, this is the first time in which the index lies below the 50-point breakeven level. This suggests that manufacturing will keep on struggling to grow in 3Q13. However, the recent increase in non-oil exports represents a glimmer of hope for the sector," said Sergio Martin, chief economist at HSBC in Mexico.

What to read next

Mexican auto industry says NAFTA is critical for U.S.
Record $30 billion leaving U.S. for Mexico
Mexico: Growth in remittances remains solid in October