Mexico: Manufacturing PMIs climb in July but remain well entrenched in contractionary terrain

The seasonally-adjusted manufacturing Purchasing Managers’ Index (PMI) produced by the Mexican Institute of Financial Executives (IMEF) climbed to 48.1 in July from 43.1 in June, thus moving further away from the record-low reading recorded in May. However, despite the increase the print indicated that the manufacturing sector continued to contract in July. Softer declines in production, new orders and employment drove the indicator’s climb.

Similarly, the seasonally-adjusted manufacturing PMI produced by IHS Markit ticked up to 40.4 in July from 38.6 in June, thus hitting the highest level since March. However, it remained well below the 50-threshold, pointing to a further stark deterioration of business conditions in the manufacturing industry. July’s mild uptick was largely driven by a softer fall in new orders and a less pessimistic outlook among manufacturers. Regarding prices, firms continued to cut output prices, despite a stabilization in input costs, in a bid to stay competitive amid a weakened demand environment.

According to the LatinFocus Consensus Forecast panel, industrial output will plunge 8.9% in 2020. Our panel sees industrial output increasing 2.9% in 2021.

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