Mexico's manufacturing sector contracted in October for a 19th consecutive month, but at a slower pace, according to the Mexican finance executives' association IMEF purchasing managers' survey.
The manufacturing purchasing managers' index (PMI) rose to 47.2 from 46.0 in September, its third consecutive monthly increase and closer to the 50-point threshold that would mark the beginning of expansion.
The uptick suggests the deceleration seen over the last 19 months has become "less pronounced, although without clear signs of expansion," said IMEF. Any "recovery in the manufacturing sector is still partial," it added.
IMEF added prospects for recovery are deeply uncertain with discussions just beginning in the process to review and likely re-negotiate the USMCA free trade agreement with the US and Canada by July 2026.
While the process could bring clarity to US tariffs enacted this year and ongoing treaty disputes, the "process is taking place within a challenging international context, given [US President Donald] Trump's tariff strategy and the volatility of his trade decisions."
Key sub-indexes also rose in October, with new orders jumping 4.5 points to 47.2 and production moving 2.3 points higher to 46.7, both in their 19th month of contraction.
But employment slipped to its lowest level since June 2022, dropping 0.9 points in October to 42.6, holding in contraction for a 21st month, and "underscoring the weakness in the industrial labor market."
Inventories fell back into contraction in October, dropping 5.9 points to 46.3 after briefly climbing above 50 in September.
IMEF's non-manufacturing PMI entered expansion territory for the first time in 10 months, rising 1.3 points to 50.4 in October, "suggesting a possible turning point in the performance of the services and trade sectors," IMEF said.
New orders rose by 2 points to 50.8 in October after a 0.9-point dip in September. The production sub-index increased by 3.3 points to 50.5, while employment fell 0.5 points to 48.5.
Despite improvements, IMEF stressed the long-term PMI trendlines for both the manufacturing and non-manufacturing index remain below 50 points, suggesting the recent increases "have yet to consolidate into a substantive change in economic dynamics."
