Mexican manufacturing tumbles as price hikes bite

MEXICO CITY (Reuters) – Mexico’s manufacturing sector declined in July, with demand for the nation’s items hit by inflation after a protracted pandemic-driven downturn, a survey confirmed on Friday, regardless of hopes for a restoration.

The seasonally adjusted S&P International Mexico Manufacturing Buying Managers’ Index (PMI) fell to 48.5 in July from 52.2 in June.

Apart from a quick hiatus in Might and June, Mexico’s PMI has lingered under the 50-point threshold that separates development from contraction since March 2020. It hit a file low of 35.0 in April 2020 through the preliminary enactment of the nation’s COVID-19 containment measures.

The information confirmed a July drop in manufacturing unit orders and decrease gross sales, with strain from drought, enter shortages and inflation.

The drop in manufacturing output additionally prompted a marginal drop in employment for the primary time in 4 months.

“Firms are actually reporting trepidation over their financials, an element which restricted enter shopping for and led to the non-renewal of non permanent contracts,” mentioned Pollyanna De Lima, economics affiliate director at S&P International Market Intelligence.

Enterprise confidence additionally dropped, with nearly one-quarter of these polled predicting output ranges would proceed to fall within the coming 12 months, De Lima added.

“Solvency considerations, alongside supply-chain constraints, the conflict in Ukraine and acute worth pressures stifled enterprise confidence in July.”

Mexico’s central financial institution introduced a file rate of interest improve final month if an effort to regulate inflation, with extra hikes anticipated.

(Reporting by Isabel Woodford; Enhancing by David Alire Garcia and William Mallard)