Manufacturing Industries Had Positive August: BanorteBy Sofía Hanna | Tue, 10/19/2021 - 11:47
Mexican manufacturing industries exceeded expectations in August by growing 5.5 percent year-over-year, surpassing the previous 4.1 percent forecast, according to Banorte. However, analysts from the bank warn of several global and local risks that may continue influencing future growth.
While manufacturing sectors are recovering, Banorte's August report shows that they are still 2.0 percent below the pre-pandemic levels seen in February 2020. The industry is expected to continue to be affected by a series of disruptions. Overall, manufacturing industries grew by 0.4 percent month-over-month, which adds to last month’s 1.2 percent growth. This is remarkable considering that supply disruptions remain and continue leading to higher raw material costs. While the mining sector contracted for the third consecutive month in August, falling by 0.1 percent, construction and manufacturing reported positive figures, albeit small. Manufacturing, for example, grew by 0.2 percent because of continued disruptions in the supply chain.
The outlook for the remainder of the year continues to be highly uncertain. "The main issue continues to be the lack of raw materials for various producers. This is reflected in surveys such as Markit's PMI, with businesses stating that this is a problem in both the US and Mexico," reads Banorte’s report. On the other hand, the improvement in economic conditions in both countries is a favorable sign that could result in renewed dynamism in some sectors, boosting demand. However, tensions continue over the USMCA amid the recent labor consultations in the automotive sector and lockdowns are not ruled out this year and in 2022.
While the future remains uncertain, some productive sectors continue to outpace those affected by international supply chain disruptions. “Despite the fading of the positive base effect, the differences in the annual comparison between sectors remain, with construction (8.7 percent) and manufacturing (6.6 percent) still high. Meanwhile, both mining (1.9 percent) and utilities (-4.8 percent) remain more modest,” according to Banorte.