- The manufacturing sector shows weakness in the face of persistent pressures, where Nuevo León is the exception.

- However, there is still room for action to boost domestic manufacturing as Mexico's economic engine.

CAINTRA notes with concern the weakness of the country's manufacturing sector, which has recently stagnated due to the internal and external challenges it faces. In this scenario, Nuevo León's industry has been the exception, continuing with positive results, albeit at a slower growth rate.

At the national level, manufacturing figures for the first quarter of the year show that this sector remained practically unchanged with respect to the close of 2022, by presenting a contraction of -0.11TP3Q. This situation is the result of a slowdown, and even contraction in some months, of manufacturing exports. In fact, exports from January to April 2023 grew by 6.2%, when in 2022 they grew by 15.8%.

The weakness of domestic manufacturing could extend to the fragility of U.S. manufacturing, which has shown a -1.6% drop with respect to 2022. In addition, high inflation and interest rates have impacted private investment in the northern neighbor, which contracted 12% in the first quarter of 2023, where Mexican industrial goods would be affected. In addition, it is expected that, starting in the second quarter, Mexico will face a contraction in its GDP.

At the national level, there is still optimism among industrialists regarding the arrival of new investments, since business sentiment indicators, such as the manufacturing orders index, have remained above the 50-point expansion threshold.

In contrast to this performance, manufacturing in Nuevo León has shown greater resilience compared to the national level, as the main industry indicators continue to expand, as shown by our Economic Expectations Survey and record job creation in the state.

Against this backdrop, we call on the authorities to boost the country's manufacturing sector, especially industrial SMEs. This would be achieved if we continue to take advantage of the benefits of Nearshoring and integrate SMEs into the value chains of new investments. For example, through supplier integration programs, so that new companies in the country see value added in SMEs and integrate them with real national content in their products and services.

Undoubtedly, some fears of weakness for the domestic industry are beginning to be palpable. However, there is still margin and time to act and lessen the blow, providing greater strength to the domestic market, reducing the current administrative complexity for the operation of companies and promoting competitive financing for the productive sector.

CAINTRA Nuevo León