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IMEF Manufacturing Indicator decreased 2.8 points in August

The IMEF Manufacturing Indicator decreased 2.8 points in August to 45.0 units, remaining in a contraction zone for 16 consecutive months.

In general, the IMEF Indicator ranges from 0 to 100 points and the level of 50 points represents the threshold between an expansion (greater than 50) and a contraction (less than 50) of economic activity.

In principle, when the index is above the threshold, an increase is interpreted as a sign of a more rapid future expansion; when the index is below the threshold, an increase is interpreted as a sign of a slower future contraction.

However, the indicator does not provide specific information on the magnitude of the expected changes.

IMEF Manufacturing Indicator

The trend-cycle series of the IMEF Manufacturing Indicator increased 0.6 points to close at 44.4 units and continue in the contraction zone for fifteen consecutive months.

For its part, the Indicator adjusted by company size fell 1.8 points, reaching 50.7 units and, thus, remained in the expansion zone for two consecutive months.

During August, the five components of the IMEF Manufacturing Indicator registered falls.

The New Orders sub-index decreased 3.1 points, to 44.7, and Production fell 3.9 points, to close at 43.5 units.

For its part, the Employment sub-index showed a reduction of 1.3 points, to close at 45.1; Inventories decreased 4.9 points to close at 45.1 and thus return to the contraction zone. Lastly, the Product Delivery sub-index fell 0.7 units to 47.8.

IMEF Manufacturing Indicator and its components

Mexican economy

Expectations for 2021 in Mexico are very different from what GDP growth rates observed in past recessions.

In the eighties and nineties, as well as in the recession of 2008-2009, GDP grew at rates similar in magnitude to the falls in the recession.

In 1994, for example, GDP fell 6.3% and in 1995 it grew 6.8 percent.

Likewise, in the global economic-financial crisis of 2008-2009, the GDP registered a fall of 5.3% in 2009 and in 2010 it grew 5.1%.

This behavior is very different from that anticipated for 2021. The sharp drop in investment, as well as in business confidence indicators, and the lack of fiscal support for companies – to preserve employment – have led analysts to place the growth forecasts for the coming year at around 3%. “These forecasts are not promising,” said the Institute.

 

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