Mexican manufacturing tumbles as price hikes bite

A employee walks previous storage silos on the ALIPEC animal feed manufacturing unit, the place a mixture of imported and nationally-produced corn is used to make feed for cows, pigs and chickens, on the outskirts of Guadalajara, Mexico March 11, 2021. REUTERS/Fernando Carranza

MEXICO CITY, July 29 (Reuters) – Mexico’s manufacturing sector declined in July, with demand for the nation’s items hit by inflation after an extended 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) (MXPMIM=ECI) fell to 48.5 in July from 52.2 in June.

Except for a quick hiatus in Could and June, Mexico’s PMI has lingered beneath the 50-point threshold that separates progress 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 stress 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.

“Corporations 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 struggle in Ukraine and acute value 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

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