Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-05-22
Wall Street ended the trading session with gains, despite a significant drop in Walmart's stock, which fell by 7% following its quarterly earnings report. The decline in Walmart's shares overshadowed the overall positive performance of the market. — El Economista, 21 May 2026. Read more
The Mexican peso experienced a slight depreciation against the US dollar following the release of the Bank of Mexico's (Banxico) minutes. Governor Victoria Rodríguez Ceja's comments in the minutes indicated a cautious outlook on monetary policy, contributing to the peso's movement. The market reacted to the insights provided, reflecting investor sentiment regarding future economic conditions. — El Economista, 21 May 2026. Read more
The indictment of Raúl Castro by US authorities has provoked significant outrage among the Cuban population. Many view the move as an affront to Cuba's sovereignty and a continuation of US aggression. The Cuban government has condemned the indictment, calling it a politically motivated act that undermines diplomatic relations. — Expansión, 21 May 2026. Read more
The Mexican peso closed lower against the US dollar today, continuing its struggle in the currency market. Analysts noted that the peso 'does not catch a signal' in the ongoing exchange rate dynamics. The article highlights the current economic challenges faced by the peso amid fluctuating market conditions. — El Financiero, 21 May 2026. Read more
The Mexican peso has depreciated against the dollar due to a decline in appetite for emerging market currencies. Analysts attribute this shift to various global economic factors, impacting investor confidence in the peso. The article highlights the ongoing challenges faced by the currency in the current financial landscape. — El Economista, 21 May 2026. Read more
The article discusses the expectation that high interest rates will remain in place for an extended period. Victoria Rodríguez Ceja, the Governor of Banxico, indicated that the central bank's monetary policy will continue to focus on controlling inflation. The article emphasizes the implications of prolonged high rates on the economy and financial markets. — El Financiero, 21 May 2026. Read more
The Mexican peso strengthened against the US dollar as tensions between the United States and Iran escalated. The exchange rate showed a recovery, reflecting market reactions to geopolitical developments. Analysts noted the peso's resilience in the face of external pressures, highlighting the impact of international relations on currency performance. — El Financiero, 20 May 2026. Read more
The Mexican peso closed with depreciation as uncertainty in the Middle East continues. Market analysts noted that the currency is 'tired' of waiting for a resolution in the region, which has affected investor confidence. The ongoing geopolitical tensions have led to fluctuations in the peso's value. — El Financiero, 19 May 2026. Read more
The cost of 30-year US debt has reached its highest level since 2007, reflecting significant changes in the bond market. This increase in cost is attributed to various economic factors, including interest rate adjustments and investor sentiment. The current financial landscape is closely monitored by policymakers and market analysts. — Expansión, 19 May 2026. Read more
Crude oil prices have surged to their highest level in two weeks, driven by ongoing geopolitical tensions and supply concerns. Analysts note that this increase reflects market reactions to recent developments in oil-producing regions. The rise in prices may impact global markets and fuel costs. — El Economista, 19 May 2026. Read more
EU will remove ‘remaining barriers to trade’ with Mexico agreement — Google News, 21 May 2026. Read more
Declining Global Oil Inventories Threaten Summer Supply: IEA — Google News, 21 May 2026. Read more
Mexico, EU to sign trade deal Friday to diversify supply chains — Google News, 21 May 2026. Read more
Mexico and EU Leaders Arrive for Major Trade Signing — Google News, 21 May 2026. Read more
Mexico’s central bank says Q1 contraction above expectations, recovery will be slow — Google News, 21 May 2026. Read more
Banxico Minutes Signal Inflation Risks From Middle East Conflict — Google News, 21 May 2026. Read more
FIFA 2026, EU Trade Deal Reshape Mexico’s Agribusiness Outlook — Google News, 20 May 2026. Read more
Mexico & Serbia boost trade ties — Google News, 20 May 2026. Read more
Trump tariffs here to stay, US trade official tells Mexican firms: Sources — Google News, 20 May 2026. Read more
Baldwin Leads Colleagues Urging Trump Admin to Keep American Workers at Center of U.S.-Mexico-Canada Trade Negotiations — Google News, 20 May 2026. Read more
Updated: 2026-05-09 by Alexander Dentler
Key Takeaways
Following the May 7, 2026 decision, Banxico's policy rate stands at 6.50%, reflecting a cut of 0.25% as part of a broader trend of easing monetary conditions. After Banxico's May 7 meeting, the target rate has been adjusted to 6.50%, representing a significant policy shift in light of persistent economic challenges. The recent cut adds to the previous reduction in March, indicating a broader trend towards easing as the central bank seeks to support economic stability amid rising uncertainty. With this latest decision, the cumulative change now reflects a total decline of 0.50% since March, signaling a responsive approach to current economic conditions.
The Fed's target rate currently sits at 3.62%, establishing a rate differential of 2.88% in favor of Mexico. Relative to the United States, Banxico's current policy stance reveals a significant gap of 2.88% between the two central banks. While the Fed has maintained its rate amidst ongoing economic assessments, Banxico's recent cuts indicate a more aggressive response to domestic pressures. This first-mover dynamic, where the Fed has consistently acted prior to Banxico, is an essential consideration for understanding the evolving landscape of monetary policy coordination between the two economies.
The rate differential presents both opportunities and challenges for capital flows and foreign exchange stability in Mexico. The rate differential creates a complex environment for market participants, influencing capital flows into and out of Mexico. This significant gap could lead to heightened interest from foreign investors seeking higher yields, yet it also raises concerns over potential currency volatility. As Banxico navigates this nuanced landscape, maintaining stability amid external pressures will be pivotal for sustained economic growth.
The central bank's policy rate is the primary tool for steering inflation and economic activity. Banxico targets 3% annual inflation and adjusts its overnight interbank rate to influence borrowing costs throughout the economy. The rate differential with the United States affects capital flows and exchange rate dynamics — a wider spread can attract foreign investment but may constrain domestic credit. Policy decisions are announced roughly every six weeks following scheduled monetary policy meetings.
Updated: 2026-05-22 by María López
Key Takeaways
With new data on Mexican inflation and ongoing security issues, the model points toward likely inaction from Banxico at its next meeting. Current model-based expectations indicate a substantial chance of no action with a hold probability of about 58%. This reflects a cautious approach as the next decision date of February 5, 2026, approaches. Since the last update, the mean expected change has swung slightly, now suggesting a potential cut of 11bp. The modal bucket remains at ±0bp, while there's also a notable 38.9% chance of a -25bp move, underscoring the mixed signals policymakers are navigating.
Recent updates show inflation is still a major concern, while geopolitical tensions are rising. Data on CPI has been refreshed, revealing persistent inflationary pressures that continue to cloud the economic outlook. Meanwhile, other key indicators, such as credit spreads and bond yields, remain unchanged, indicating that the broader market sentiment hasn’t shifted significantly since the last analysis.
The interplay of inflation and security concerns is weighing heavily on the committee's decision-making process. The ongoing inflationary pressures are exerting a moderate hawkish influence on Banxico's policy stance, while the heightened public security issues are pulling sentiment in a dovish direction. Notably, economic policy uncertainty is a significant driver that could complicate the committee's judgment. Ultimately, actual policy decisions will rely heavily on the committee’s assessment of these multifaceted challenges, rather than solely on model outputs.
Ordered Probit Probabilities
| Rate Change | 04 Feb | 05 Feb 2026 | Δ |
|---|---|---|---|
| Cut | 58.4% | 42.0% | -16.4 |
| Hold | 41.6% | 58.0% | +16.4 |
| Hike | 0.0% | 0.0% | +0.0 |
| E[Δrate] | -17.5 bp | -11.3 bp | +6.2 bp |
Probabilities in %. Modal bin in bold. E[Δrate] = probability-weighted expected change in basis points.
When markets and the public can anticipate how and why the central bank acts, uncertainty falls and policy becomes more effective. Clear communication helps businesses plan investments, households make borrowing decisions, and international investors gauge currency risks. Economists often stress the importance of clarity and traceability — the ability to follow and understand decisions step by step. Without it, rate moves risk being misread, causing volatility instead of stability. With it, policy signals are more credible, anchoring expectations and strengthening the central bank's influence.
Rate-change probabilities are estimated using an ordered probit model with eight macroeconomic and financial drivers: consumer price inflation (CPI), consumer confidence, the 30-day peso/dollar change, the CETES 28-day spread, stock market growth, the yield curve slope (10Y minus 2Y), Mexico's Economic Policy Uncertainty index, and the Fed-Banxico rate differential. The model maps these drivers into probability bins for the next monetary policy decision, ranging from cuts of 50 basis points or more to hikes of the same magnitude. Coefficients are estimated on the historical record of Banxico decisions and their pre-decision data environment. Probabilities update daily as driver series refresh and should be treated as one input among many.
Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Lower Brier scores indicate better-calibrated probability forecasts.
Updated: 2026-05-22 by María López
Key Takeaways
Bond prices as of 2026-05-22 show the 10Y-3Y spread at 1.36%, reflecting a slight uptick from the previous observation. As of 2026-05-22, the latest yield curve data reveals the 10Y-3Y spread at 1.36%, reflecting a nominal increase of 0.07% since the last update. The real spread remains stable at 0.34%, pointing to a consistent outlook for real returns. The implied inflation spread, now at 1.02%, suggests that market participants are factoring in an ongoing inflationary environment. This combination of spreads indicates that while the market is alert to inflation risks, there’s a degree of confidence in the stability of yields.
The curve shape suggests a consensus on holding rates, aligning with the market’s expectation of no immediate changes from Banxico. The curve shape suggests that market participants are anticipating a hold from Banxico at its next meeting, which is in line with the current policy rate expectations. However, there’s a subtle disconnect as the persistent inflation concerns and economic challenges weigh heavily on investor sentiment. This cautious alignment reflects a broader uncertainty, where the market is ready for potential shifts depending on evolving economic indicators.
Yield Spread Update
| Spread (10Y−3Y) | 20 May | 21 May 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.30 | 1.36 | +0.054 | 0.98 |
| Real | 0.34 | 0.34 | -0.002 | 0.71 |
| Inflation | 0.96 | 1.02 | +0.056 | 0.26 |
All values in percentage points. NS-DFM = Nelson-Siegel Dynamic Factor Model filtered estimate.
When investors and businesses trust that monetary policy will remain credible and predictable, long-term interest rates respond more smoothly to central bank signals. Yield curve spreads between long and short maturities serve as a real-time gauge of this alignment: a stable, upward-sloping curve suggests markets expect gradual normalization, while persistent inversions often signal that markets anticipate policy shifts before they are announced. For Mexico, where inflation targeting depends on anchoring expectations across a diverse investor base, the 10-year minus 3-year spread offers a compact summary of whether policy communication is landing as intended.
Yield curve spreads are filtered using a Nelson-Siegel Dynamic Factor Model (NS-DFM) estimated on weekly data. The model ingests 16 synthetic yield curve points — 11 nominal maturities (overnight through 30 years) and 5 real maturities (overnight through 30 years) — fitted via Nelder-Mead optimization on Banxico bond prices. Factor loadings follow the Diebold-Li (2006) Nelson-Siegel parameterization, decomposing each yield curve into level, slope, and curvature components for both real rates and implied inflation. The Kalman smoother extracts filtered spread estimates that track the underlying signal in daily bond market noise.
So…what is this—and why am I doing it?
This project began with a simple question in 2021: how much of the work of producing useful economic information can we hand over to machines? Monitoring Monetary Policy in Mexico is a thought experiment at that frontier. By combining statistical analysis, tailored visualizations, and large language models, it demonstrates how even highly specialized topics—such as Mexican monetary policy—can be made more accessible, relevant, and insightful. Meanwhile, the system is designed to run without human intervention on a daily basis. My role is to set the design; the automation carries it out.
When does data stop being a dump and start being a story?
The initiative builds on my earlier Monitoring Mexico project but has since evolved in important ways. Data is no longer simply displayed; it is analyzed, distilled, forecasted, visualized, interpreted, narrated, and contextualized. Large language models help transform both raw and modeled data into context, turning numbers into stories. In short, raw information is transformed into understanding.
Who’s in charge here—a Raspberry Pi or common sense?
Behind the scenes, the site runs on a Raspberry Pi 5 powered by Python and a library of custom routines. Automation drives much of the process, but human expertise remains essential in designing the explanation and presenting the material. The balance between machine efficiency and human judgment is what makes the project work.
How do we cut through the jargon and keep the signal?
The aim is straightforward: to bring clarity to an area often obscured by technical detail. Monetary policy shapes households, firms, and markets, yet its analysis usually remains confined to experts. By filtering, explaining, and visualizing the data, this project seeks to make that knowledge more transparent and more useful.
Is this the 80/20 rule you learn in business school in the wild?
At its core, the site is both a contribution to public understanding and an exploration of how informational value is created. It is a humble attempt to deliver 80% of the insights of a central bank analysis with 20% of the resources—while also testing what the future of knowledge generation might look like.
What might be new the next time you drop by?
This is very much a work in progress, with new features, analyses, and visualizations added over time. We can now at the brink of generating our very own economic policy uncertainty (EPU) index, and we consider a newsletter. But maybe a chatbot might be more appropriate? Coming back to check for updates is always a good idea. If the site sparks curiosity, fosters dialogue, or simply helps illuminate Mexico’s economic dynamics, it has achieved its goal.
Updated: 2026-05-08 by Ignacio Crane
Key Takeaways
The mid-April 2026 CPI release shows headline inflation at 4.23%, reflecting a modest decrease from the previous observation. The mid-April 2026 CPI release shows headline inflation at 4.23%, positioning it at the 54th percentile and still above Banxico's target range of 2%-4%. This latest figure marks a decrease of 0.13 from the prior release, indicating a three-month downward trend in headline inflation. The persistence above the target suggests that while there may be a softening in inflationary pressures, it remains a concern for the monetary authority as they navigate an uncertain economic landscape.
Core inflation, which excludes volatile food and energy prices, remains a critical indicator of underlying price pressures. Core inflation, which excludes volatile components, registers at 4.32%, placing it in the 72nd percentile. This figure reflects a slight decrease of 0.01 from the previous month and indicates that core inflation remains elevated compared to the target. The divergence from the target underscores the complexity of current inflation dynamics, suggesting that underlying pressures could complicate Banxico's decision-making as they assess the need for potential policy adjustments.
Trade prices reveal notable trends, particularly in export prices, which continue to exert upward pressure on inflation. Trade prices have been notably impacted, with export price inflation reaching 14.31%, thus remaining at the 93rd percentile. This significant increase in export prices could exacerbate domestic inflationary pressures, particularly as the Mexican economy remains sensitive to global market fluctuations. The interplay between elevated export prices and domestic inflation underscores the challenges facing policymakers as they seek to balance external pressures with domestic economic stability.
| 2H Apr 2026 | 2H Apr 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 4.2 | — | — | 4.9 | 4.9 | +0.00 |
| Core CPI | 4.3 | — | — | 4.4 | 4.4 | +0.00 |
| Export Price Index | — | — | — | 5.9 | 5.9 | +0.00 |
| Import Price Index | — | — | — | 5.2 | 5.2 | +0.00 |
All values in percentage points (YoY, seasonally adjusted). "Error" = actual minus previous forecast. "Revision" = change in 12-month outlook since last update. "—" = no prior forecast available.
The Consumer Price Index (CPI) measures changes in the cost of a representative basket of goods and services purchased by Mexican households. Banxico targets 3% annual inflation with a tolerance band of 2%-4%. Core CPI — which excludes volatile food and energy prices — reveals underlying inflation trends that guide monetary policy. Import and export price indices extend the picture by linking Mexico's inflation dynamics to global markets, trade flows, and currency movements.
Headline CPI, core CPI, export prices, and import prices are projected six months ahead using a Vector Autoregression (VAR). The four series are estimated jointly, so each informs the others' forecasts through lagged interactions. Projections update each time new CPI data arrive and may shift materially after revisions.
Out-of-sample backtest over 66 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 66 evaluation windows using the Vector Autoregression (VAR). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Headline CPI (RMSE 1.11 vs 1.05 naive, n=66); Core CPI (RMSE 0.66 vs 1.09 naive, +39% improvement, n=66); Export Price Inflation (RMSE 7.27 vs 7.77 naive, +6% improvement, n=56); Import Price Inflation (RMSE 2.99 vs 2.05 naive, n=56).
Updated: 2026-03-27 by Alexander Dentler
Key Takeaways
The latest update on the SHF House Price Index reveals that house price inflation reached 8.92% YoY as of October 1, 2025, reflecting a continuing trend of rising prices over the past three quarters. This inflation rate stands above the historical average, which has ranged from 2.0% to 11.7%, positioning it in the 80th percentile since 2006. Notably, house price inflation exceeds both headline CPI at 4.02% and housing CPI at 3.44%, highlighting a significant premium of 4.90 percentage points over the former and 5.49 percentage points over the latter. This divergence suggests a robust demand in the housing market that may not be fully captured by broader inflation metrics, although the recent DFM nowcast hints at potential downward pressure.
The Dynamic Factor Model (DFM) nowcast indicates a contrasting picture, with a current estimate of 7.72% YoY as of February 1, 2026, trailing the observed inflation by 1.20 percentage points. This divergence implies that auxiliary indicators, particularly mortgage lending trends and housing CPI components, are exerting downward pressure on the underlying trend. The model suggests that while house prices have been rising, there may be emerging signs of mean reversion, prompting a cautious stance on future price increases. Policymakers and market participants should consider this nuanced interplay when assessing the housing market's outlook.
DFM Nowcast Comparison
| Observed | Nowcast | Prev. Nowcast | Gap | Revision | |
|---|---|---|---|---|---|
| SHF House Price Inflation (YoY) | 8.92% | 7.72% | 7.72% | -1.20 | +0.00 |
Observed: 2025-Q4. Nowcast: 2026-02. Previous nowcast: 2026-02. "Gap" = nowcast − observed. "Revision" = change in nowcast since previous run.
The SHF House Price Index is published quarterly by Sociedad Hipotecaria Federal, Mexico's federal mortgage development bank, typically around 40 days after the reference quarter ends. It is constructed from mortgage appraisal data (avalúos) using a Case-Shiller repeat-sales methodology, with breakdowns by state, new vs. used housing, and market segment (affordable vs. mid-to-high-end). Because the index reflects prices at the point of mortgage origination, it captures credit-driven demand rather than asking prices, making it a tighter gauge of actual transaction values and collateral quality across the housing market.
A Dynamic Factor Model (DFM) filters the quarterly SHF House Price Index using five Banxico auxiliary series — the funding rate, mortgage lending volumes, a housing purchase survey indicator, the SPF unemployment forecast, and construction activity — plus two CPI components (headline and housing subcategory). The model extracts a common factor from these seven indicators, producing a smoothed nowcast that updates between quarterly SHF releases whenever auxiliary data arrive. This filtered estimate helps distinguish persistent trends from quarterly noise in the observed house price series.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. House Price Nowcast (RMSE 1.32 vs 0.66 naive, n=12).
Updated: 2026-04-16 by Pablo Rivas
Key Takeaways
Brent oil prices have surged to $99.41 as of March 2026, reflecting a 38.6% increase year-on-year. With Brent oil data updated to March 2026, prices now sit at $99.41, showing a notable 38.6% rise compared to last year. The momentum is clearly upward, with a monthly increase of 43.2%. This surge in oil prices is particularly relevant for Mexico, where oil is a significant export, impacting federal revenue and regional economies.
Copper prices reached $12,528.71 in March 2026, demonstrating a robust 28.7% increase from the previous year but facing recent downward pressure. Copper, as of March 2026, stands at $12,528.71, up 28.7% year-on-year. However, it’s on a downward trend recently, with a monthly decline of 3.3%. This fluctuation is crucial for Mexico's mining sector, which is heavily reliant on copper production.
Corn prices are now at $213.30 as of March 2026, reflecting a modest annual increase of 2.7%, and maintaining a stable trend. Corn prices updated to March 2026 are at $213.30, showing a small year-on-year increase of 2.7%. The trend appears stable, with only a slight monthly rise of 1.3%. Given that Mexico is a net importer of corn, these price dynamics directly influence food prices and the costs of staples like tortillas.
Commodity prices feed directly into Mexico's inflation pulse and terms of trade. Oil and corn affect energy and food costs, while copper is a proxy for global industrial demand. For policymakers, sharp commodity swings can shift inflation expectations and fiscal balances, making these prices critical to monitor.
Updated: 2026-05-22 by María López
Key Takeaways
The March 2026 IMSS release shows unit labor costs at 2.80%, signaling that wages are outpacing productivity growth in manufacturing. This rising ULC, now at the 70th percentile, reflects a concerning trend where labor costs are increasing faster than productivity. With the monthly growth rate down by 0.21, businesses may face mounting cost pressures, potentially leading to inflationary strains down the line. A tighter grip on productivity could be essential to maintaining competitiveness in this environment.
Real wages in the formal sector are showing positive momentum, with growth at 4.47% in manufacturing and 3.35% in retail. This uptick in real wages indicates that purchasing power is improving for households, offering a much-needed boost amid inflation concerns. With positive gains in both sectors, workers are better positioned to manage rising costs, but sustaining this trend will be crucial for overall economic health.
Across sectors, manufacturing and retail diverge significantly in the wage-productivity dynamic, with manufacturing ULC rising while retail ULC lags behind at 0.98%. Manufacturing is currently outperforming retail, indicating a stronger position in terms of wage growth relative to productivity. Retail’s slower adjustments may put pressure on its competitiveness and could squeeze margins, highlighting a fundamental split in sectoral health amid broader economic challenges.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 3.8 | 3.8 | +0.00 |
| ULC Retail | — | — | — | 0.2 | 0.2 | +0.00 |
| Real Wage Mfg | — | — | — | 5.0 | 5.0 | +0.00 |
| Real Wage Retail | — | — | — | 2.9 | 2.9 | +0.00 |
All values in % (MoM, seasonally adjusted). "Error" = actual − previous forecast. "Revision" = change in 12-month outlook. "—" = no prior forecast available.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Twelve-month-ahead forecasts for unit labor costs and real wages in manufacturing and retail are produced using a Seasonal Autoregressive Integrated Moving Average with eXogenous inputs (SARIMAX) model. The model is estimated on seasonally adjusted month-over-month percentage changes, with all four series — ULC manufacturing, ULC retail, real wage manufacturing, and real wage retail — entering as joint endogenous variables. No external auxiliary data feed the forecast; the model relies solely on the internal dynamics and cross-series interactions of the wage and productivity data. Forecast confidence intervals widen over the projection horizon.
Out-of-sample backtest over 24 evaluation windows using the SARIMAX. Out-of-sample backtest over 24 evaluation windows using the SARIMAX. RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. ULC Manufacturing (RMSE 2.97 vs 3.21 naive, +7% improvement, n=24); ULC Retail (RMSE 5.33 vs 5.22 naive, n=23); Real Wage Manufacturing (RMSE 2.20 vs 2.62 naive, +16% improvement, n=24); Real Wage Retail (RMSE 3.05 vs 2.97 naive, n=23).
Updated: 2026-03-21 by María López
Key Takeaways
Following the latest quarterly GDP release from INEGI, real GDP growth in Mexico has surged to an impressive 8.81%, reflecting a significant increase of 6.51 percentage points from previous estimates. The nowcast estimate, updated with the latest data, shows that real GDP growth has leapt to 8.81% for Q4 2025, marking a notable change of +6.51pp from previous projections. This explosive growth rate highlights the dynamic recovery occurring within the economy, setting a positive tone for future economic discussions and policy deliberations.
Private consumption continues to play a pivotal role in this economic momentum, reaching a staggering growth rate of 10.48%. Household spending is clearly supporting overall activity, significantly outpacing GDP growth. This surge in private consumption signals strong domestic demand, which is essential for sustaining the recovery and potentially alleviating some of the pressures from external factors.
Exports, however, tell a different story, with growth currently at -1.01%, reflecting a substantial decline of 6.22 percentage points. This downturn in export activity indicates weakening external demand, a concerning signal for an economy that heavily relies on trade, especially with key partners. It raises alarms about competitiveness and the potential impact on sectors tied to global markets, which could dampen growth if the trend continues.
On the flip side, imports are showing a robust growth rate of 7.47%, up by 2.10 percentage points from previous estimates. Domestic absorption is clearly on the rise, suggesting that businesses and consumers are optimistic and willing to invest in goods from abroad. This trend can bolster local economic activity, despite the underlying challenges posed by sluggish export performance.
DFM GDP Nowcasts
| Component | Last Obs. (Q4 2025) | Nowcast (Q4 2025) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 9.60% | 8.81% | 8.81% | +0.00 |
| Private Consumption | 5.88% | 10.48% | 10.48% | +0.00 |
| Imports | 28.72% | 7.47% | 7.47% | +0.00 |
| Exports | -1.01% | -1.01% | -1.01% | +0.00 |
QoQ annualized, seasonally adjusted. Nowcast = DFM filtered estimate using higher-frequency inputs. "Revision" = change from previous run.
Real activity data tracks the economy's engine — output, spending, and trade — while nowcasts bridge the lag between releases. Real GDP captures total production; private consumption reflects household demand; exports and imports reveal external demand and the flow of inputs for Mexico's trade-exposed, manufacturing-heavy economy. Shifts in U.S. demand, global prices, and the peso often show up first in trade, then filter into GDP and consumption. Because official series arrive with delays and revisions, model-based nowcasts provide an early, probabilistic read for policy timing — useful if treated with uncertainty bands and cross-checked against higher-frequency signals.
A Dynamic Factor Model (DFM) nowcasts quarterly GDP and its demand components — private consumption, imports, and exports — using 14 higher-frequency inputs. These include monthly employment indicators, industrial production (IGAE), consumer confidence, capacity utilization, retail sales, and private consumption, plus quarterly GDP sector breakdowns. The model extracts common factors via the Kalman filter, updating the nowcast each time any input series receives new data. Nowcast estimates are conditional expectations that narrow as more data arrive within each quarter.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Real GDP (RMSE 3.90 vs 3.82 naive, n=12); Private Consumption (RMSE 5.41 vs 2.51 naive, n=12); Exports (RMSE 22.26 vs 18.28 naive, n=12); Imports (RMSE 11.34 vs 17.09 naive, +34% improvement, n=12).
Updated: 2026-05-16 by Pablo Rivas
Key Takeaways
The latest ENOE survey for March 2026 indicates a concerning uptick in unemployment, reflecting broader economic uncertainties. The March 2026 ENOE survey shows unemployment at 3.26%, marking a 0.0547% increase from the previous month and the fourth consecutive monthly rise. This level is around the 24th percentile historically, suggesting that while the current unemployment rate isn't at crisis levels, it's trending upwards. The recent shift could signal underlying labor market weaknesses that warrant close attention from policymakers.
By gender, the story unfolds with notable divergence in unemployment rates between men and women. Male unemployment stands at 3.5%, while female unemployment is slightly higher at 3.62%. Both rates have risen recently, but the increase for males has been more pronounced, indicating that men are facing escalating joblessness in this uncertain economic climate.
Informal employment continues to dominate the labor landscape, with implications for economic stability. The share of informal workers remains at a staggering 55.9%, which is around the 98th percentile historically. This marks a rise of 0.355% from the previous month, underscoring the persistent challenge of informality in the labor market. The upward trend in informality suggests that more workers are falling into less secure employment arrangements, which could hinder economic recovery efforts.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.76% | 3.26% | — | — |
| Underemployment Rate | 10.42% | 12.20% | — | — |
| Male Unemployment | 2.50% | 3.50% | — | — |
| Female Unemployment | 2.61% | 3.62% | — | — |
Observed = latest quarterly ENOE value. Nowcast = DFM filtered estimate using monthly auxiliary data. "Revision" = change from previous run.
Labor slack and its composition shape inflation pressure, policy timing, and social risk. Unemployment, underemployment, and unemployment by gender reveal how broad and uneven slack is. In Mexico's large informal sector, the informal employment share can swing sharply — often contracting faster in downturns as unprotected jobs are cut first, then rebounding early — masking true slack if headline unemployment alone is tracked. Tracking these dimensions helps distinguish cyclical slack from structural mismatches and calibrate monetary policy accordingly.
Between quarterly ENOE survey releases, a Dynamic Factor Model (DFM) nowcasts employment indicators using higher-frequency auxiliary data. The model ingests monthly series — industrial production, consumer confidence, capacity utilization, retail sales, and private consumption — alongside quarterly GDP components to extract common factors that track the business cycle. When any auxiliary series receives new data, the Kalman filter updates the nowcast, providing an early signal before the next official employment release.
Out-of-sample backtest over 18 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 18 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Unemployment (RMSE 0.54 vs 0.13 naive, n=15); Underemployment (RMSE 1.26 vs 0.50 naive, n=11); Male Unemployment (RMSE 0.44 vs 0.26 naive, n=11); Female Unemployment (RMSE 0.44 vs 0.28 naive, n=11).
Updated: 2026-05-13 by María López
Key Takeaways
The latest INEGI productivity data for Q1 2026, released on May 13, indicates secondary sector output at 99.9, reflecting a decline of -0.632 from the previous month. INEGI's Q1 2026 productivity release shows secondary sector output at 99.9, down -0.632 from the previous month and around the 49th percentile historically. The construction sector is pulling down the overall index, while mining has posted modest gains recently. This mixed performance highlights a recovery that is not yet broad-based, leaving the economy vulnerable to external shocks.
Manufacturing composites show diverging trends, raising questions about sustainability in the sector. Across the PCA indices, productivity is at a critical juncture, with output declining by -0.223 recently, while sales have shown resilience with a small increase. However, labor demand remains weak, signaling potential sustainability concerns in the recovery. The disconnect between rising sales and stagnant labor demand could indicate that businesses are cautious about future hiring amid ongoing economic uncertainties.
The top-performing subsectors are food and transport equipment, while energy continues to lag behind. Within manufacturing, the food sector stands out with strong productivity gains, pushing the index to a record high, while transport equipment has also seen a notable increase. Conversely, the energy subsector remains a drag on overall performance, reflecting ongoing challenges. This concentration of growth in food underscores its critical role in stabilizing the manufacturing landscape amid broader economic headwinds.
PCA Composite Indices
| Index | May 2025 | Jun 2025 | Δ |
|---|---|---|---|
| Productivity Index | 0.50 | 0.28 | -0.22 |
| Sales Index | 0.58 | 0.61 | +0.03 |
| Inventory Index | 0.15 | -0.03 | -0.18 |
| Labor Demand Index | -1.32 | -1.49 | -0.17 |
Standardized scores (0 = mean, ±1 = one standard deviation).
Productivity trends reveal the economy's capacity to grow without stoking inflation. In Mexico, productivity in the secondary sector — mining, energy, construction, and especially manufacturing — signals how efficiently output expands relative to inputs. Strong productivity gains mean firms can meet demand without raising prices, easing inflation pressure and supporting sustainable wage growth. Weak productivity, by contrast, constrains supply, making cost shocks more inflationary. Manufacturing deserves closer scrutiny, as its diverse subsectors respond differently to global demand, exchange rate shifts, and investment cycles. Tracking these patterns helps judge whether growth is supported by efficiency gains or reliant on credit and labor cost increases.
Four composite indices — productivity, sales, inventory, and labor demand — are constructed using Principal Component Analysis (PCA) applied to INEGI manufacturing subsector data and GDP sector composition. PCA extracts the dominant co-movement pattern across subsectors, producing standardized indices that summarize broad trends while filtering out subsector-specific noise. The productivity index draws on output-per-worker measures across manufacturing branches; the sales, inventory, and labor demand indices use INEGI's corresponding survey-based indicators supplemented by GDP sector weights.
Updated: 2026-05-09 by Alexander Dentler
The April 2026 consumer confidence survey shows the general index at 1.26, placing it in the 88th percentile and indicating elevated sentiment among consumers. INEGI's latest April release reveals confidence at a level that is notably optimistic, as the general index has risen marginally by 0.04. This sentiment stands in stark contrast to the housing-specific index, which has dipped by 0.17, suggesting a divergence in consumer outlook between general economic conditions and housing stability. The elevated general confidence, positioned 1.3σ above the mean, implies that consumers remain buoyant despite the challenges faced in the housing sector, potentially reflecting a broader resilience in spending behavior for non-housing-related purchases.
PCA Confidence Indices
| Index | Mar 2026 | Apr 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.22 | 1.26 | +0.04 |
| Housing Appetite | 0.81 | 0.64 | -0.17 |
| Durables Appetite | 0.84 | 0.99 | +0.16 |
Values are z-scores (0 = historical mean, ±1 = one standard deviation).
The ENCO (Encuesta Nacional sobre Confianza del Consumidor) is conducted jointly by INEGI and Banco de México. Roughly 2,300 households across 32 major cities are interviewed during the first 20 days of each reference month, and results are published around the 5th of the following month. The survey uses a rotating panel design — each household stays in sample for four consecutive months, rests for eight, then returns for four more — which smooths out idiosyncratic response noise while capturing genuine shifts in sentiment. Because confidence data arrive before most hard activity indicators for the same month, they provide an early read on whether household demand is strengthening or cooling.
Three composite confidence indices — general sentiment, housing appetite, and durables appetite — are extracted from the eight raw INEGI survey questions using Principal Component Analysis (PCA). PCA identifies the common variation within each question group, producing a single index that captures the dominant signal while filtering out question-specific noise. The general index draws on six broad economic outlook questions; the housing and durables indices each isolate spending appetite in categories most sensitive to interest rates and household balance sheets.
COMING SOON...
Updated: 2026-05-05 by Pablo Rivas
Key Takeaways
The April 2026 SPF survey shows the aggregate Concern Index at 2.98, placing it in the 66th percentile, with a notable rise of 0.15 from the previous month. The April 2026 SPF survey shows the aggregate Concern Index at 2.98, placing it in the 66th percentile, with a notable rise of 0.15 from the previous month. This uptick is significant as it reflects a growing sense of unease among economists, marking a two-month upward streak. With the index's recent rise, it suggests increasing vigilance on potential threats to economic stability, which could impact decision-making for both policymakers and investors.
Economists have identified public insecurity as the top growth constraint, currently at 8.6%. Economists have identified public insecurity as the top growth constraint, currently at 8.6%, followed closely by US trade policy at 7.1% and a lack of structural change at 4.7%. The most significant mover this month is public insecurity, which has decreased by 1.02% month-on-month. This shifting landscape indicates that concerns around security are still paramount, yet some optimism might be creeping into other areas, particularly trade policy, as it shows signs of stabilization.
The perceived probability of recession stands at 20.0%, which is elevated relative to historical norms, placing it in the 68th percentile. The perceived probability of recession stands at 20.0%, which is elevated relative to historical norms, placing it in the 68th percentile. This figure reflects a moderate concern compared to the previous quarter, suggesting that while the fears are present, they are not overwhelming at this moment. Looking ahead, the next quarter's probability of 24.5% indicates that economists are bracing for a potential uptick in recession fears as conditions evolve.
According to forecasters, the peso is viewed as overvalued, with a current-month misalignment of +0.101. According to forecasters, the peso is viewed as overvalued, with a current-month misalignment of +0.101. This suggests that the peso is weaker than expected, and the misalignment persists across future horizons, reinforcing the sentiment that economic pressures may continue to weigh on the currency. Such a perspective on FX expectations could influence monetary policy decisions, particularly as Banxico navigates this complex economic landscape.
Banxico's Survey of Professional Forecasters (Encuesta sobre las Expectativas de los Especialistas en Economía del Sector Privado) polls roughly 40 groups of analysts from banks, financial institutions, consultancies, and research centers. Responses are collected during the second half of each reference month — typically between the 15th and 28th — and results are published on the first business day of the following month. Because respondents form their expectations before some end-of-month official data releases, the survey provides an early window into shifting professional sentiment on inflation, growth constraints, recession risk, and exchange rates, making it a valuable leading indicator for policymakers and market participants.
Updated: 2026-05-22 by María López
Key Takeaways
Mexican equity markets as of May 22, 2026, show excess returns at 0.2614, reflecting a steady climb amid persistent inflation concerns and geopolitical uncertainties. With data through May 22, 2026, excess returns are holding strong, but the recent revisions to the risk-return metrics signal an underlying fragility. While excess returns are at the 90th percentile, the drop in the illiquidity index underscores a potential tightening in market conditions. The latest observations reflect a nuanced picture where slight upticks in volatility and continued inflationary pressures could lead to market recalibrations.
The decomposition shows that recent volatility has been driven primarily by US policy shocks and real-sector difficulties, both of which are keeping market participants on edge. Recent volatility has been predominantly influenced by external shocks, particularly from the US, alongside domestic challenges in the real sector. The combination of these drivers has resulted in a notable increase in the excess return index, which is now on a two-month upward streak. Market participants should brace for continued impacts from these persistent volatility sources as they navigate upcoming policy decisions.
Investor sentiment remains cautious, with AAII readings reflecting a heightened sense of uncertainty in the market. Policy uncertainty is palpable, with discussions around inflation and security dominating market sentiment. The elevated levels of investor caution suggest that many are bracing for potential shifts in monetary policy as Banxico balances inflation control against pressing economic and security issues. This climate of uncertainty could hinder risk appetite, affecting market movements in the coming weeks.
Volatility Measures
| Measure | Apr 2026 | May 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.0811 | 0.0299 | +0.1110 | US Policy Shocks (+0.137) |
| Realized Volatility | 0.0095 | 0.0092 | -0.0002 | US Policy Shocks (-0.001) |
| Illiquidity (Amihud) | 108.9576 | 95.6952 | -13.2625 | US Policy Shocks (-9.514) |
Monthly averages. Top Driver = largest OLS category contribution to latest value.
Financial market returns, volatility, and liquidity signal investor sentiment and risk appetite. Excess returns over government bonds capture the risk premium investors demand for holding equities; wider spreads suggest higher perceived risk or stronger growth prospects. Realized volatility in a stock market index reflects uncertainty — sharp swings indicate fragile sentiment and raise the cost of capital. Illiquidity shows how trading volume and price impact interact: when liquidity dries up, small trades can move prices disproportionately, amplifying shocks. For monetary policy, these indicators matter because they shape funding costs, investment flows, and the broader transmission of rate decisions into financial conditions.
Volatility drivers are analyzed in two steps. First, Principal Component Analysis (PCA) groups the six SPF concern categories and investor sentiment indicators (AAII bull-bear spread, NAAIM exposure index) into thematic driver clusters that capture common variation. Second, an OLS regression decomposes recent volatility movements into contributions from each driver cluster, quantifying how much of the observed excess return and realized volatility is attributable to policy uncertainty, external sentiment, and domestic macro conditions. The decomposition is descriptive — it identifies contemporaneous associations, not causal effects.
Updated: 2026-05-22 by María López
Key Takeaways
Banxico's May 2026 credit release shows money market spreads tightening, signaling a cautious lending environment. Following the latest lending data, rate premia stand at 0.187, reflecting a continued narrowing trend with a drop of 0.15 from the previous month. This marks the fifth percentile historically, indicating tighter credit conditions for borrowers. The narrowing spread suggests that lenders may be more optimistic about credit risk, but caution remains as economic signals remain mixed.
Household mortgage rates remain high, putting pressure on affordability for potential homeowners. The total annual cost of mortgages averages 13.9% with a range from 10.7% to 28.2%. High costs continue to reflect a challenging environment for borrowers, as the policy rate hold from Banxico does not seem to be fully passed through to consumers. This scenario raises concerns about housing affordability, especially for first-time buyers navigating a tough market.
Debt issuance patterns show a pronounced reliance on fixed-rate financing amid economic uncertainty. Corporate financing has shifted, with fixed-rate debt making up 18.74% of the total, while variable rates account for only 19.92% combined. This shift indicates that firms are opting for the stability of fixed rates to hedge against potential policy rate increases, reflecting a cautious stance in an uncertain economic landscape. As a result, companies may be less exposed to interest rate fluctuations, but this could also limit their flexibility in adjusting to changing market conditions.
Rate premia show how market and bank funding costs move relative to the policy rate, indicating the efficiency of monetary transmission. Household mortgage rates capture the cost of long-term borrowing — their sharp rise in recent years signals affordability pressures and distributional effects, as many families face double-digit costs. Debt issuance patterns, normalized by GDP, reveal how firms finance themselves; the balance between fixed and variable rates matters for vulnerability to policy shifts. Together, these indicators show how policy rates filter into real borrowing conditions, affecting credit demand, investment, and ultimately growth and inflation dynamics.
