Mexico | Higher variance of manufacturing output in May

Summary

The BBVA Research Multidimensional Manufacturing Indicator grew 2.0% YoY in May, bringing the average year-over-year growth variance for the first five months of the year to 5.0% (vs. 1.0% in the same period last year).

Key points

• Key points:
• The greater variability in production levels observed in recent months suggests that companies are still making adjustments to their production processes in order to internalize the new US trade policy.
• For now, the latest figures on new import orders in the US suggest a slowdown in external demand in the coming months, as indicated by the import subcomponent of the US ISM Manufacturing Index, which in May reached a historic low of 39.9 (the lowest level since May 2009).
• Regarding capacity utilization levels, as of April, twelve of the twenty-one subsectors were still below their pre-COVID figures (vs. eleven the previous month); These include apparel manufacturing, leather goods manufacturing, and the chemical industry.
• We estimate the increased variability in manufacturing production will continue into the second half of the year, given the gradual adjustments companies are making to their processes as a result of the new U.S. tariff regime; In the aggregate, this will be reflected in a slower dynamism in the sector in the coming months.

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