The Mexican economy maintains an improvement in the second quarter of 2021, indicated the Mexican Institute of Finance Executives (IMEF), when interpreting its anticipated measurements of key indicators of manufacturing production, consumption and services.

The IMEF Manufacturing Indicator increased 0.7 points in May to 52.3 units, thus remaining in the expansion zone (> 50) for the third month.

The IMEF Indicator ranges from 0 to 100 points and the level of 50 points represents the threshold between an expansion (greater than 50) and a contraction (less than 50) of economic activity.

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For its part, the IMEF Non-Manufacturing Indicator registered an increase in May of 1.9 points to close at 53.6 units and remain in the expansion zone for the third month.

“The results of the IMEF Indicator confirm an improvement in economic activity in both the manufacturing and non-manufacturing sectors during May. In the first, the important increases in the New Orders and Production sub-indices stand out, reaching their highest levels since 2012 and 2018 respectively, ”said the IMEF.

As for the second, it stands out that all the sub-indices were located above or above the threshold of 50 points.

For example, the latest indicators for industrial production and retail sales have shown an upward expansion path.

The reasons for this dynamism have already been pointed out for a few months: the extraordinary fiscal stimuli, the return of greater confidence since the inauguration of President Joe Biden and a wide coverage of the population vaccinated against Covid-19.

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However, this economic dynamism has been coupled with an acceleration in inflation.

This rebound has been due to an annual comparison base effect and, above all, due to cost pressures. The type of inputs whose prices have pushed inflation are raw materials (commodities).

The Federal Reserve (Fed) has declared that it expects this effect of acceleration of inflation to be temporary and that it will dissipate in the second half of the year. Nonetheless, economists debate how transitory such a phenomenon will be. Estimates place annual inflation at 2.8% at the end of the year.

If you want to know more about the behavior of the industrial market in our country, consult our Industrial Report May 2021.

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