Mexico’s manufacturing sector shrank for the 15th straight month in May due to subdued sales, raw material shortages and the COVID-19 crisis, though the rate of decline was the second-slowest since the pandemic hit Mexico, a survey showed on Tuesday.
The IHS Markit Mexico Manufacturing Purchasing Managers’ Index slipped to 47.6 in May from 48.4 in April, remaining below the 50 threshold that separates growth from contraction. The index has been clawing its way higher gradually after plummeting to 35.0 in April 2020, by far the lowest reading in the survey’s 10-year history.
“PMI data for May suggested that Mexican manufacturers continued to struggle, with new orders again undermined by the COVID-19 pandemic,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
Factories in Mexico operated below capacity again in May, with goods producers reporting reduced working hours and the termination of temporary employment as sales remained weak, De Lima said.
Mexico’s seasonally adjusted unemployment rate rose to 4.7% in April from 4.4% in March, the national statistics agency said on Thursday.
De Lima said that “adding to the challenges faced by manufacturers were rising input prices as raw material shortages pushed up cost burdens.”
A Bank of Mexico board member said on Wednesday that inflation, which stood at 5.80% in the year through the first half of May, has risen partly because of a low base of comparison and that some inflationary pressures are coming from higher costs and prices of raw materials.
On a positive note in May companies were more upbeat towards the year-ahead outlook for production.
“Optimism was, however, pinned on hopes that the COVID-19 pandemic will be brought under control,” said De Lima.
(Reporting by Anthony Esposito; Editing by Chizu Nomiyama)
