MEXICO CITY Oct 1 Mexico's manufacturing sector stagnated in September, underscoring weak growth after a slump this year at the factories of Latin America's second-biggest economy, a survey showed on Tuesday.
The HSBC Mexico Manufacturing Purchasing Managers' Index fell to 50.0 in September, after adjusting for seasonal variation, from 50.8 in August.
A reading above 50 signals expansion. The monthly reading was the second-lowest since the series began in April 2011. The index posted its first recorded contraction in July, followed by August's slight expansion.
"This result suggests that the manufacturing sector will grow, but at a moderate pace. This is consistent with the incipient signs of recovery observed in non-oil exports, in particular in auto exports," said Sergio Martin, chief economist at HSBC in Mexico.
Factory output and new orders slowed compared to August, the survey showed. Shaky U.S. demand, along with a drop in local construction, has dragged on Mexico's economy this year.
Mexico's economy contracted for the first time in four years in the second quarter, pushing the central bank to lower interest rates in September. The economy is seen growing only about 1.7 percent this year compared to 3.8 percent in 2012.
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.