URGENT-Mexico factories stagnate again in October -PMI
MEXICO CITY Nov 1 (Reuters) - Mexico's factories remained stagnant in October, as output and employment contracted, pointing to weakness in an incipient manufacturing recovery in Latin America's second-biggest economy, a survey showed on Friday.
The HSBC Mexico Manufacturing Purchasing Managers' Index edged up to 50.2 in October, after adjusting for seasonal variation, from 50.0 in September.
A reading above 50 signals expansion, while a lower reading suggests contraction. October's reading was the second-lowest since the series began in April 2011. The index posted its first recorded contraction in July.
Although new orders rose at a modest pace for the third month in a row, both output and employment fell below the 50-point threshold in October.
"This result suggests that the manufacturing sector will continue to struggle to grow in the coming months," said Sergio Martin, chief economist at HSBC in Mexico.
Mexico's economy likely expanded in the third quarter at its fastest pace in more than a year after a sharp slowdown in the first half of 2013, the finance ministry said Wednesday.
Analysts expect Mexico to grow about 1.3 percent this year, slumping from 3.8 percent in 2012.
Shaky U.S. demand, along with a drop in construction, dragged on Mexico's economy this year. Martin said massive flooding and weaker U.S. growth due to a partial government shutdown there could crimp a rebound in Mexican manufacturing during the third quarter.
The central bank cut interest rates last week to a record low of 3.50 percent, lowering borrowing costs for the second month in a row, but policymakers said no further moves down were planned due to the signs of better growth.
The PMI index, compiled by Markit, is composed of five sub-indices tracking changes in new orders, output, employment, suppliers' delivery times and stocks of raw materials and finished goods.
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