Mexico‘s manufacturing sector began the final quarter of 2022 with another decline in output, according to the S&P Global PMI indicator.
Among other causes, the result was due to inflationary pressures, cash flow problems and shortages of raw materials slowing customer demand.
Despite this, the pace of contraction in production and sales moderated to its weakest level in four months.
This lack of new work, coupled with efforts to free up capital, led companies to cut their purchasing levels and deplete their inventories of both inputs and finished goods.
Also, the most recent results showed a further acceleration in input cost inflation, but competitive conditions led to a slower increase in selling prices.
In general, values in the global purchasing managers’ index compiled by S&P Global above 50 points denote expansion, while those below 50 indicate contraction. An exception to this rule is the supplier lead time index, where more negative values indicate longer lead times.
For Mexico, the S&P Global Manufacturing Purchasing Managers’ Index, which was unchanged from the September figure, remained at 50.3 in October and remained above the 50.0 unchanged threshold for the second consecutive month in a context of slightly rising factory employment and longer lead times.
In October, Mexican industrials reduced their production for the fourth consecutive month.
The slowdown was attributed to a shortage of inputs and a lack of new jobs.
However, the pace of contraction was marginal and the slowest in this sequence.
New job starts also slowed to a marginal pace that was the weakest in four months.
Those survey participants who reported a drop highlighted weak customer demand, lingering problems in the automotive sector, and shortages of raw materials.
Weak international demand for industrial goods held back overall sales and companies experienced the third successive drop in exports, which was the fastest in seven months.
The slowdown was attributed to raw material shortages, cash flow problems affecting customers and strong price pressures.