Mexico’s manufacturing sector grows for the second month in a row

MEXICO CITY, July 1 (Reuters)Mexico’s manufacturing sector rose for a second consecutive month in June after being stuck in negative territory for more than 2.5 years, indicating tentative signs of a recovery in demand for the country’s goods, according to a survey released Friday. .

The seasonally adjusted S&P Global Mexico Manufacturing Purchasing Managers’ Index MXPMIM=ECI rose to 52.2 in June from 50.6 in May.

Prior to the May reading, the PMI had remained below the key 50 threshold that has separated growth from contraction since March 2020. It hit a record low of 35.0 in April 2020 at the height of the COVID-19 lockdowns in the country.

June data showed a rise in factory orders and an uptick in sales that led companies to ramp up production, increase input purchases and continue hiring.

Above all, for the first time since the start of the pandemic, manufacturing production increased, according to the latest survey.

“Improving demand conditions, especially in external markets, have paved the way for Mexican manufacturers to take a step in the right direction towards a recovery in June,” said Pollyanna De Lima, associate director of the Economics at S&P Global Market Intelligence.

Supply chain issues persisted, however, with the latest results pointing to escalating delivery delays and near-record increases in input costs and windfall business volumes.

With the intensification of supply chain disruptions, economic growth has been somewhat constrained while price pressures have remained elevated, De Lima said.

“The June data showed one of the biggest increases in input costs in more than 11 years of data collection, as war in Ukraine, lockdowns in China and volatile energy prices exacerbated pressures. ongoing disruptions to supply chains,” she added.

Latin American leaders have been working hard in tackling high inflation and the region has some of the highest interest rates in the world, with Mexico’s central bank announcing a record rate hike the latest. last week.

(Reporting by Anthony Esposito; Editing by Paul Simao)

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Marjorie N. McClure