Overview of Mexico’s Economic Performance
According to the Instituto Mexicano de Ejecutivos de Finanzas (IMEF), the June results of the IMEF Manufacturing and Non-Manufacturing Indicators confirm the stagnation in Mexico’s industrial activity. The IMEF Manufacturing Index stood at 47.8 points, a 0.3-point increase from May, marking fifteen consecutive months below the expansion threshold.
IMEF Manufacturing Indicator
The IMEF Manufacturing Index, ranging from 0 to 100 points, represents the boundary between economic expansion (above 50) and contraction (below 50). The key components—new orders (45.3), production (46.7), and employment (44.4)—remain persistently in contraction, indicating minimal impulse from the manufacturing sector.
- New Orders: At 45.3, new orders continue to contract, reflecting weak demand.
- Production: With a score of 46.7, production remains in contraction, indicating reduced output.
- Employment: The employment index at 44.4 suggests job losses or minimal hiring in the manufacturing sector.
Even after adjusting for company size, the IMEF Manufacturing Index dropped by 1.0 point, indicating that the weakness is not confined to a specific segment.
IMEF Non-Manufacturing Indicator
The IMEF Non-Manufacturing Index also showed a pause in its trend, closing at 49.0 points. The adjusted measurement for company size decreased by 1.1 points to 47.7, both remaining below the expansion threshold (50.0). This confirms a contracting phase in the services and commerce sector, with a downward trend over the past seven months.
Economic Context and Impact
Mexico’s economic performance in the second quarter of 2023 has been mixed, following a slight improvement in the first quarter. The IGAE for April showed better-than-expected growth of 0.5% monthly, with improvements in mining, manufacturing, and services.
However, annual terms reveal a 1.5% decrease compared to the same month last year. Export growth of non-oil products in May increased by 1.8% annually, but this is below the average rate observed over the previous three months (4.9% annually).
On the import side, consumption (-8.1% annually) and capital (-15% annually) imports moderated, signaling potential weakness in consumer spending and investment.
Inflation Trends
Recent inflation data continues to suggest an upward trend. The general annual inflation rate in May reached 4.4%, while the underlying inflation stood at 4.1% annually.
Key Questions and Answers
- What does the IMEF Manufacturing Index signify? The index, ranging from 0 to 100 points, indicates the boundary between economic expansion (above 50) and contraction (below 50). The current score of 47.8 reflects a contracting manufacturing sector.
- How do the key components of the IMEF Manufacturing Index perform? New orders (45.3), production (46.7), and employment (44.4) all remain in contraction, indicating weak demand and reduced output with minimal job growth.
- What do the IMEF Non-Manufacturing Index results show? The index, at 49.0 points, and its adjusted measurement for company size (47.7), both remain below the expansion threshold (50.0). This confirms a contracting phase in the services and commerce sector.
- What are the recent trends in Mexico’s economic performance? The second quarter of 2023 has shown mixed results, with slight improvements in the first quarter. Annual terms reveal a 1.5% decrease compared to the same month last year, with export growth below average and moderated imports signaling potential weakness in consumer spending and investment.
- What are the current inflation trends in Mexico? Recent data suggests an upward trend, with the general annual inflation rate at 4.4% and underlying inflation at 4.1% in May.
