Mexico factory activity slips from over one-year high in July

FILE PHOTO: An employee works at an LED TV assembly line at a factory that exports to the U.S. in Ciudad Juarez
FILE PHOTO: An employee works at an LED TV assembly line at a factory that exports to the U.S. in Ciudad Juarez, Mexico, September 21, 2016. Picture taken September 21, 2016. REUTERS/Jose Luis Gonzalez/File photo

August 1, 2017

MEXICO CITY, (Reuters) – The pace of growth in Mexico’s manufacturing sector dipped in July from a more than one-year high as expansion of output slackened, a survey showed on Tuesday.

The Markit Mexico Manufacturing Purchasing Managers’ Index <MXPMIM=ECI> slipped to 51.2 in July from 52.3 in June when adjusted for seasonal swings.

A reading above 50 signals expansion in the sector, while a reading below that points to contraction.

“July’s survey data suggests that the Mexican manufacturing sector is struggling to break out from its recent slow growth trajectory,” IHS Markit associate director Tim Moore said in a statement.

Moore noted readings on output and new orders slowed after export sales fell for the first time in 12 months.

On the positive side, job creation picked up to its fastest pace in more than a year in July.

The Mexican peso has bounced back this year and business confidence has improved as U.S. President Donald Trump backed away from threats to impose tariffs on Mexican-made goods and moved toward a renegotiation of the North American Free Trade Agreement.

Mexico sends about 80 percent of its exports, which are mostly manufactured goods like cars and TVs, to the United States.

The PMI index is composed of five sub-indexes tracking changes in new orders, output, employment, suppliers’ delivery times and stocks of raw materials.