IMEF manufacturing indicator, in a contraction zone for 19 months in a row

The IMEF Manufacturing Indicator decreased 0.2 points in December to settle at 48.7 units.

Thus, this Indicator remained in the contraction zone (<50) for nineteen consecutive months.

Its trend-cycle series increased 0.1 points to close at 49.0 units and continue in the contraction zone for nineteen consecutive months. For its part, the Indicator adjusted by company size increased 0.1 to close at 54.7 units, placing it in the expansion zone for the sixth consecutive month.

Direction of the Mexican economy

The IMEF Indicator is a diffusion index that assesses the economic environment based on a survey of five qualitative questions. In particular, the IMEF Indicator is constructed to help anticipate the direction of manufacturing and non-manufacturing activity in Mexico and, based on the expected evolution of these sectors, infer the possible evolution of the economy in general in the short term.

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.

Services

In turn, the IMEF Non-Manufacturing Indicator registered a 1.0 point drop in December to close at 48.1 units and place itself in a contraction zone for the eleventh consecutive month.

The trend-cycle series of this indicator increased 0.2 to 49.0 units, thus remaining in the contraction zone for twenty consecutive months. For its part, the Indicator adjusted for company size fell 0.4 units to settle at 48.0 units, thus remaining in the contraction zone for the eleventh consecutive month, since the data for January 2020 was revised upwards and became expansion zone, with 50.1 units.

«The results of the IMEF Indicator for December suggest that the revival of economic activity, registered in the months after the initial impact of the pandemic, continues to be hesitant and, on the margin, has lost momentum,» the IMEF said in a statement.

The exception has been the manufacturing sector adjusted for company size, which expanded steadily throughout the second half of the year. This behavior suggests that the activity of the largest manufacturing companies has been the one that has registered the greatest dynamism in this sector.

On the other hand, activity in the services sector remained in a contraction zone throughout the year, both in its weighted index and in the index adjusted by company size, which reflects the weakness of the services sector as a whole.

IMEF Manufacturing Indicator

The IMEF Manufacturing Indicator decreased 0.2 points in December to settle at 48.7 units. Thus, this Indicator remained in the contraction zone (<50) for nineteen consecutive months. Its trend-cycle series increased 0.1 points to close at 49.0 units and continue in the contraction zone for nineteen consecutive months.

For its part, the Indicator adjusted by company size increased 0.1 units to 54.7 units, placing it in the expansion zone for the sixth consecutive month.

IMEF Manufacturing Indicator and its components

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

The Production sub-index dropped 0.4 points to 49.0; the Inventories sub-index fell 2.9 points to 42.3 units and the Product Delivery sub-index decreased 1.6 units to fall to 49.8 and return to the contraction zone.

In the opposite direction, the New Orders sub-index of the IMEF Manufacturing Indicator increased 0.4 points to close at 48.4 units and the Employment sub-index increased 0.3 points to close at 48.9 units.

IMEF Non-Manufacturing Indicator and its components