News, Insights and Best Practices for Manufacturing in Mexico

Manufacturing making significant inroads in North America

16 Sep 2014

Category: Labor & Economics, Manufacturing in Mexico

While manufacturing has long been in doldrums for many reasons in North America, there are signs that the industry is starting to make a comeback. Much of the depression has been caused by offshoring to far off nations such as China, where the cost of labor has historically been cheaper while the infrastructure is sufficient enough for goods to be shipped back to the United States. However, that situation has changed significantly changed over the last couple years, with jobs coming back to Mexico and the United States. The recovery is driven in large part by several different factors, but the message is showing that this recovery is something more permanent.

Improvements on all ends
In Mexico, the numbers are looking upbeat. Global bank HSBC, in conjunction with Markit, compiled its Purchasing Managers' Index for the month of August 2014. According to the report, the PMI for the country was as at 52.1 percent, representing general growth in the industry from the previous month. It was a significant increase from July, which at 51.5 percent was the lowest point in the previous nine months, and was the fastest rise since April. It also showed that the slight downturn was likely an anomaly for the time being. The study indicated that production volumes have gone up the fastest in four months, which led to further input buying throughout the entire sector. On top of that, there were significant gains in employment, despite the Mexican unemployment rate going up to 5.47 percent for the month of July. Wages have also been stable at 100.8 index points, according to Mexican government agency INEGI, bolstering trade. The numbers indicate a strong resurgence for the sector is imminent.

Mexico's fortunes are part of a greater resurgence in the continent, including the United States. The Markit survey for American manufacturing showed an increase to 58.0 percent in August, the highest reading since early 2010, based on high volumes of new work and better production levels. Payroll numbers have also gone up, along with production backlog, which ensures that the sector is healthy. The private data is supported by information from the Federal Reserve Bank of Philadelphia, which provided a positive indicator of industry growth with its Business Outlook Survey increasing to 28.0 for the month of August.


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