[SNE] IIEEM Marginal Improvement; November

IMEF, through its Mexican Business Environment IMEF Indicator, exposes, month by month, a business climate index with respect to how the Mexican economy is doing. The indicator is formulated from a small monthly survey, where data is obtained to analyze and then expose a very short-term forecast or advance indicator, anticipating the general trend of the considered sectors.

The considered sectors are manufacturing (integrally and without excluding export manufacturing, or other economic agents in that sector), and non-manufacturing (which integrates the commercial sector and services).

In the USA the Instute for Supply Management has been developing the manufacturing and non-manufacturing ISM indicators for many years and is used by both economy academics and companies to understand the context and, where appropriate, make decisions based on the best available information. The government also analyzes the indicator for its decision-making process.

IMEF, in its case, develops this indicator and is the first one issued by the private sector and provides information of great use to entrepreneurs in their investment and production perspective.

Among the peculiarities, is that the final measurement is scaled at a 50 points threshold, where if the result is higher than this figure, it is conceived that the indicator is in economic expansion; below the indicator is conceived in economic recession.

In the last report, December 2017, it is summarized that the Mexican economy is still growing but highlighting a slow growth.

The IMEF Manufacturing Indicator drops 0.7 points to 51.7 units, expanding for the seventh consecutive month. But the trend-cycle drops 0.3 points towards 52.3 units; despite this, still in expansion and with 7 months in the range. Adjusted by company size rises 1.1 points to 53.1 units, reversing the decrease for November. The trend-cycle adjusted by company size drops 0.2 points to 52.6 units in expansion for 8 consecutive months.

The IMEF Non-Manufacturing Indicator drops 0.5 points to 52.0 units and registers 8 months in expansion. The trend-cycle without change towards 52.4 units with 9 months in expansion. Adjusted by company size, it increases 0.1 points to 51.6 units and its trend-cycle drops 0.3 points to 51.5 units, but with 9 months in expansion.

As a summary, both indicators continue to expand for terms of 7 months (manufacturing) and 8 months (non-manufacturing). This implies that the economy continues to grow. But the pace slows down. The cycle-trends suggest a leveling trend towards the end of 2017.

In terms of interpretation, an individual economic agent (regardless of size) in any sector, can conceive that the economy will continue to grow in January, slowly; with that information at hand, make decisions, such as hiring employees, inputs purchasing, debt decisions, investment decisions or even reinvestment or profit taking.

The first quarter of a year, in general, tends to be slow, as products and services become more expensive and consumers tend to spend resources on some matters related to government taxation, such as cars taxes, property taxes, etc. Therefore, it can be understood as a quarter with a certain inflationary trend and a certain economic pause, while adjustments are made for these expenses, and the corresponding salaries negotiations.

But the fact that the economy continues to grow, encourages us to consider that even in a slow quarter, there is an opportunity to continue forward in particular decisions of the companies. The IIEEM also provides information on sub-indices by company size, and where appropriate, can provide more solid data for better decision-making.

To obtain registration, participate in the monthly survey and obtain the corresponding monthly report first-hand, please go to: http://www.iieem.org.mx.