March 1, 2019 / 6:16 PM / 25 days ago

CORRECTED-UPDATE 1-Mexico's manufacturing growth quickens, after weak forecasts

(Corrects 6th paragraph to say index was up, not down)

MEXICO CITY, March 1 (Reuters) - Mexico’s manufacturing sector grew at its strongest pace in over a year in February, signaling an economic rebound after 2018’s year-end slowdown across major sectors clouded the new year’s outlook.

Manufacturing expanded for the second month in a row, at its strongest rate in 13 months, the IHS Markit Mexico Manufacturing Purchasing Managers’ Index survey released on Friday showed, with gains in production, exports, new orders and employment.

This contrasts with a late-February central bank survey released on Friday, in which analysts lowered their annual growth forecast to 1.63 percent from 1.80 percent.

Since President Andres Manuel Lopez Obrador took office in December, the business community has questioned the leftist’s ability to boost the economy.

Government data on Monday showed economic growth slowed to 0.2 percent in the last three months of 2018. Goldman Sachs on the same day cut its growth forecast, the latest private sector institution to cast a gloomy outlook.

However, the more recent IHS Markit Mexico Manufacturing PMI registered a reading of 52.6 in February, up from 50.9 in January. A reading above 50 signals expansion.

“Given the breadth of the expansion, it looks increasingly likely that this upturn can be sustained, at least during the near term,” said IHS Markit economist Pollyanna De Lima, who wrote the report.

The PMI index comprises five sub-indexes tracking changes in new orders, output, employment, suppliers’ delivery times and stocks of raw materials. Mexico sends about 80 percent of its exports, which are mostly manufactured goods like cars and televisions, to the United States.

Business sentiment rebounded in February after falling in January to the lowest levels seen in the series’ nearly seven-year history. The positive sentiment was attributed to projections for increased export order volumes, new product launches and corporate expansion plans.

The International Monetary Fund’s Western Hemisphere Director Alejandro Werner on Thursday called for patience in watching Lopez Obrador’s plans unfold, telling a conference in New York that the new leader is tackling challenges, such as the financial woes of state oil company Petroleos Mexicanos , or Pemex, faster than the previous president.

Lopez Obrador has noted that previous presidents also had rocky starts.

“We’re getting started. We’re going to show that the economy will grow more,” he told a news conference on Thursday.

Reporting by Anthony Esposito, Additional reporting by Daina Beth Solomon; Editing by Chizu Nomiyama and Richard Chang

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