Mexico | Lower manufacturing production in June

Summary

The BBVA Multidimensional Manufacturing Indicator decreased (-)3.8% YoY in June (the sixth consecutive drop so far this year), confirming the prolonged deceleration of the sector.

Key points

• Key points:
• The slowdown in manufacturing production materializes in a context of lower external demand, as pointed by the latest retail sales data in the US, which showed stagnation in June (MoM), with a fall of (-)1.9% in the vehicles and auto parts segment (the largest contraction since January), while spending on durable goods continues below its Jan-24 level.
• According to INEGI industrial activity figures, in accumulated terms manufacturing registers a drop of (-)0.8% as of May, compared to the same period of the previous year, with fourteen of the twenty-one subsectors reporting production levels by below those registered in Jan-24.
• Regarding capacity utilization, as of May, ten of the twenty-one subsectors were still below their pre-COVID figure (vs. eight the previous month); clothing, leather products, and the chemical industry, lagging behind.
• We anticipate manufacturing will continue to show sluggishness in the second half of the year, amid lower spending on durable goods in the US, in an environment of high interest rates and gradual normalization of households’ consumption patterns.

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