Mexico factory contracts for 26 consecutive months, inflation is close to high for the first time in 4 years

Mexico’s manufacturing sector shrank for 26 consecutive months in April, and factories responded to shrinking demand by further lowering production and input costs, according to a Monday survey.

The seasonally adjusted S & P Global Mexico Manufacturing Purchasing Managers Index is still below the 50 threshold that separates growth and contraction, but rose to 49.3 in April and up from 49.2 in March.

Studies show that a slight increase in PMI was driven by a turnaround in employment, but production, new orders and inventories shrank.

The PMI has been below the 50 mark since March 2020 and fell to a historic low in April.

“The new increase in employment and exports was a promising sign,” said Polyanna Delima, Economics Associate Director at S & P Global, adding that companies “wait for a recovery in demand.”

The companies surveyed in the study said exports increased for the first time since the COVID-19 hit, while declining demand and “rapid” price pressures restricted sales in the domestic market.

“Inflation rates continued to approach record highs, leading to a surge in sales commissions in nearly four years,” said De Lima.

Business confidence has regained and the overall level of positive emotions has reached the second highest level in more than three and a half years. Survey participants have raised expectations for economic recovery, supply chain improvements, projects awaiting approval, new customer acquisition, and tourism expansion. ..

Despite new hopes, Mexico’s manufacturing sector continues to see “underlying vulnerabilities,” Delima said.

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