Mexico | Manufacturing weakens with slowdown in the chemical and food industries

Summary

The BBVA Manufacturing Multidimensional Indicator (BBVA MMI) fell (-)1.2% YoY in June, the first contraction since February 2021.

Key points

• Key points:
• Considering the June figure, the average year-on-year variation for the first six months of the year amounts to 1.7%, 2.6 pp below the average registered in the same period of 2022.
• The drop in June suggests a turning point for manufacturing production in Mexico, after the weakness observed in the demand for durable goods in the US.
• According to INEGI data, manufacturing production fell (-)1.4% MoM in May, with drops in the food (-3.0%), chemical (-6.5%), and basic metal (-2.8%) industries, which together represent 32% of the sector's production.
• The automotive segment has shown higher resilience, reaching a production level 6.6% above its pre-pandemic figure; in terms of capacity utilization, this component reported a figure of 94.7%, the highest since the beginning of the series (Jan-2013).
• We estimate that the slowdown in manufacturing production in Mexico will materialize more vigorously in the second half of the year, given the slower growth in external demand derived from high interest rates and tighter financing conditions in the US.

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