MEXICO CITY, May 4 (Reuters) - Mexico’s manufacturing sector took a nosedive in April as production and new business contracted at record rates after measures put in place to stem the spread of coronavirus stifled economic activity, a survey showed on Monday.
The IHS Markit Mexico Manufacturing Purchasing Managers’ Index fell to 35.0 in April, by far the lowest reading in the survey’s nine-year history, from 47.9 in March.
“March PMI data suggested that the Mexican manufacturing sector had been relatively sheltered from the negative effects of the coronavirus pandemic, but that wasn’t the case in April,” said Eliot Kerr, economist at IHS Markit and author of the report.
A figure above 50 signals expansion in the sector, while a reading below that threshold points to contraction.
“The latest data revealed record lows across the board as social distancing measures drove factory closures and a collapse in demand. Meanwhile, those still operating struggled to obtain inputs amid supply-chain disruption,” said Kerr.
Preliminary data showed on Thursday that Mexico’s economy was on track to suffer its sharpest quarterly contraction in more than a decade. It shrank 1.6% in the January-March period compared with the previous quarter from its first brush with the coronavirus outbreak at the start of 2020.
Mexico did not begin to impose major curbs on the economy until the second half of March, so the main impact of the coronavirus pandemic is not expected to be fully reflected in official data until the second quarter.
That means that going forward “firms were immensely pessimistic towards the business outlook as a global economic recession looms and there remains little clarity over when this crisis might end,” said Kerr.
The collapse of the manufacturing industry is bad news for President Andres Manuel Lopez Obrador as it was showing tentative signs of stabilizing in February following three straight months of deterioration.
Now, the manufacturing industry has contracted in 11 of the 17 months since Lopez Obrador took office in December 2018.
Mexico’s economy, the second largest in Latin America, slipped into a recession last year and is forecast to sink even deeper in 2020.
The PMI index is composed of five sub-indexes tracking changes in new orders, output, employment, suppliers’ delivery times and stocks of raw materials. (Editing by Chizu Nomiyama)