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Mexican manufacturing PMI drops again in December to 3-month low

MEXICO CITY, Jan 4 (Reuters) - Mexico’s factories closed out 2020 on a somber note, deepening their contraction as a raging pandemic restricted demand, triggered job cuts and prompted a further contraction in factory output, a survey showed on Monday.

The IHS Markit Mexico Manufacturing Purchasing Managers’ Index fell to 42.4 in December from 43.7 in November, again well below the 50-threshold that marks the boundary between contraction and expansion.

The December figure marks a three-month low for the index and is the first month-on-month decline since plunging to 35.0 in April, the lowest point in the survey’s nine-year history.

“The Mexican manufacturing industry ended 2020 in a similar way it started the year, with a decline in sales causing output contraction,” said Pollyanna De Lima, economics associate director at IHS Markit.

“With domestic issues exacerbated by the pandemic, monthly rates of reduction in December for output, new orders and employment were all among the sharpest seen since data collection started in April 2011,” De Lima added.

Still, firms seemed to see a light at the end of the tunnel as they became optimistic towards growth prospects amid hopes the effects of the pandemic may subside.

Some firms “suggested that confidence stemmed from projects in the pipeline, machinery acquisition and new product releases” though the overall level of sentiment was modest by historical standards, the survey said.

The fact that Mexico’s economy grew slightly faster than expected in October, growing 1.6% in seasonally-adjusted terms compared to September, and that the first doses of Pfizer’s vaccines were flown into Mexico seemed to back that optimism.

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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