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The
seasonally adjusted S&P Global Mexico Manufacturing Purchasing
Managers' Index (PMI) fell to 48.5 in July from 52.2 in June.
Aside from a brief hiatus in May and June, Mexico's PMI has
lingered below the 50-point threshold that separates growth from
contraction since March 2020. It hit a record low of 35.0 in
April 2020 during the initial enactment of the country's
COVID-19 containment measures.
The data showed a July drop in factory orders and lower sales,
with pressure from drought, input shortages and inflation.
The drop in manufacturing output also prompted a marginal drop
in employment for the first time in four months.
"Companies are now reporting trepidation over their financials,
a factor which restricted input buying and led to the
non-renewal of temporary contracts," said Pollyanna De Lima,
economics associate director at S&P Global Market Intelligence.
Business confidence also dropped, with almost one-quarter of
those polled predicting output levels would continue to fall in
the coming 12 months, De Lima added.
"Solvency concerns, alongside supply-chain constraints, the war
in Ukraine and acute price pressures stifled business confidence
in July."
Mexico's central bank announced a record interest rate increase
last month if an effort to control inflation, with more hikes
expected.
(Reporting by Isabel Woodford; Editing by David Alire Garcia and
William Mallard)
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