By Ovunc Kutlu
ISTANBUL (AA) - Mexico's Manufacturing Purchasing Managers’ Index (PMI) fell in August to its lowest level in two years, according to a report on Monday.
The index, which measures the general direction of economic trends in the manufacturing sector, came in at 48.5 in August, down 1.1 point from 49.6 in July.
A reading above 50 indicates expansion and below 50 shows contraction.
Despite weaker demand across the manufacturing sector, input cost inflation climbed to its highest level in 21 months, global data provider S&P Global said in its report.
"August proved to be another difficult month for Mexican manufacturers, with firms trimming output, employment and stocks due to subdued sales in both the domestic and international markets," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said in the report.
"Confidence regarding the 12-month outlook for output took a hit, as companies became increasingly concerned about intense competition from China and highway insecurity," she added.
The report said August data showed a substantial drop in international sales, which manufacturers in Mexico commonly attributed to reduced orders from the US.
Raw material shortages among suppliers and peso depreciation against the US dollar also contributed to a further sharp increase in average purchasing costs at Mexican goods producers, it added.