MEXICO CITY, Feb 4 (Reuters) - A slowdown in Mexico's manufacturing sector eased in January, boosted by jobs growth and rising business confidence, but activity still declined for a third straight month in the struggling economy, a survey showed on Tuesday.
The IHS Markit Mexico Manufacturing Purchasing Managers' Index rose to 49.0 last month from 47.1 in December, taking it to the highest level since October.
A figure above 50 signals expansion in the sector, while a reading below that threshold points to contraction.
"After posting its worst performance in the near nine-year survey history during December, Mexico's manufacturing downturn eased at the start of 2020," the PMI survey said.
The sub-index that measures business sentiment jumped to an eight-month high after slipping in December, while a gauge of employment rose above 50 for the first time in three months.
That may offer some comfort to the government after preliminary data showed the Mexican economy shrank 0.1% last year, the first contraction in a decade.
The manufacturing industry has contracted in 9 of the 14 months since leftist President Andres Manuel Lopez Obrador assumed power in December 2018.
He has pledged to ramp up economic growth to an average of 4% per year, and sought to downplay the 2019 contraction by saying wealth was now more evenly distributed.
"The downturn of Mexico's manufacturing industry appears to have bottomed out, with key PMI indices moving higher in January," said IHS Markit economist Pollyanna De Lima.
Still, De Lima said IHS Markit was only forecasting economic growth of 0.7% in 2020 as policy uncertainty persisted, creating that risk that investment would remain muted.
The PMI index is composed of five sub-indexes tracking changes in new orders, output, employment, suppliers' delivery times and stocks of raw materials. (Writing by Dave Graham Editing by Chizu Nomiyama)