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Mexico's factories on the up, contract at slowest pace since onset of pandemic

Kitco News

MEXICO CITY, May 3 (Reuters) - Mexico's manufacturing sector showed tentative signs of recovery, as business conditions again contracted but at their slowest pace since the start of the COVID-19 pandemic, a survey showed on Monday.

The IHS Markit Mexico Manufacturing Purchasing Managers' Index rose to 48.4 in April from 45.6 in March, but still remained below the 50 threshold that separates growth from contraction. It has gradually recovered after plummeting to 35.0 in April 2020, by far the lowest reading in the survey's 10-year history.

Business closures, subdued sales and raw material shortages led to a further deterioration in the health of Mexican manufacturing in April, with all but the survey measures of business expectations and input costs in contraction territory, the IHS Markit survey said.

Still, there were notably softer reductions in new orders, output, exports, employment and stocks as some firms experienced greater demand for their goods.

"The Mexican manufacturing sector showed tentative signs of recovery in April, with key survey indices moving towards the stabilization figure of 50.0," said Pollyanna De Lima, Economics Associate Director at IHS Markit.

De Lima said that some firms noted that stronger demand for their goods supported job creation and production growth, but with a larger portion of companies still observing declines, the survey's measures of new orders, output and employment all remained in contraction territory.

Supply-chain constraints, raw material shortages and the Suez Canal blockage underpinned a further increase in delivery times and the sharpest rise in input costs since July 2018, the survey noted.

The PMI index tracks developments on a range of business indicators including prices, new orders, output, employment, suppliers' delivery times and stocks of raw materials. (Reporting by Anthony Esposito; Editing by Chizu Nomiyama)

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