A reading above 50 signals expansion in the sector, while a reading below that points to contraction. The December figure signaled a modest improvement in the overall health of the goods-producing sector, but remained below the long-run average of 52.8, the report said.
"The recovery from October's earthquake-related contraction across Mexico's manufacturing sector softened in December, with key variables such as output, new orders and employment all rising at weaker rates," said Aashna Dodhia, Economist at IHS Markit and author of the report. The index fell below the 50 mark for the first time in over four years in October following the destructive September quakes, which killed at least 471 people and are estimated to cost Mexico tens of billions of pesos to rebuild tens of thousands of damaged and destroyed buildings.
The overall upturn in manufacturing sector conditions was led by a rise in new orders due to an improvement in market demand, while growth in order books was reportedly supported by strong international demand for Mexican goods, the report said. Mexico sends about 80 percent of its exports, which are mostly manufactured goods like cars and TVs, to the United States.
The PMI index is composed of five sub-indexes tracking changes in new orders, output, employment, suppliers' delivery times and stocks of raw materials.