Mexican manufacturers reduce output, cut jobs due to decline in new sales
Date
11/3/2024 5:00:19 AM
(MENAFN) Manufacturers in Mexico are facing challenges as they reduce production and cut jobs due to a decline in new sales, as highlighted in a report released on Friday by S&P Global. The report indicates that firms are responding to a prolonged downturn in new business inflows by scaling back on production volumes, laying off workers, and decreasing their input purchases. This trend is further exacerbated by rising cost burdens, with inflation remaining high, although it has receded to its weakest level since April. Consequently, there has been a mild increase in factory gate charges.
The S&P Global Mexico Manufacturing Purchasing Managers’ Index (PMI) for October registered at 48.4, up from 47.3 in September. However, it remains below the neutral threshold of 50.0, indicating contraction for the fourth consecutive month. The report underscores that total new orders have declined for four months running, driven by unfavorable demand trends, delays in project approvals, cash flow difficulties, and significant competition from China.
Despite these challenges, Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, noted some positive developments. There has been a welcome easing of cost pressures and a stabilization of selling price inflation. Additionally, there was a rebound in business confidence, largely fueled by optimism regarding improved trade conditions anticipated following the upcoming US elections.
As Mexican manufacturers enter the final quarter of 2024, the outlook remains uncertain, with ongoing declines in total sales, new export orders, and production levels. However, the report offers some reassurance that while conditions are shaky, the pace of these reductions has at least slowed, suggesting a potential for recovery amid challenging circumstances.
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