Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-07-03
In June, investors withdrew $4.509 billion from Bitcoin exchange-traded funds (ETFs) on Wall Street. This significant outflow highlights a shift in investor sentiment towards Bitcoin amid changing market conditions. — El Economista, 03 Jul 2026. Read more
The Mexican peso strengthened following a decline in the dollar, attributed to the release of the U.S. non-farm payroll report. This economic data influenced market perceptions, leading to a favorable exchange rate for the peso against the dollar. — El Economista, 02 Jul 2026. Read more
Recent weak employment data and a decline in the labor force participation rate could reignite discussions about labor policies within the Federal Reserve. Analysts suggest that these developments may influence the Fed's approach to monetary policy, particularly under the leadership of Jerome Powell. The implications of these trends are being closely monitored as they could affect future economic decisions. — El Economista, 02 Jul 2026. Read more
The article discusses the financial disadvantages of living solely with cash, highlighting the lost opportunities for savings and investments that come with not using banking services. It emphasizes that individuals who do not bank miss out on benefits such as interest accrual and easier access to credit. The piece calls for greater financial inclusion to help individuals take advantage of these opportunities. — El Economista, 02 Jul 2026. Read more
The Mexican peso appreciated against the US dollar following the release of the employment report in the United States. The exchange rate closed at a favorable level for the peso, reflecting market reactions to the employment data. This development highlights the ongoing fluctuations in currency values influenced by economic indicators. — El Financiero, 02 Jul 2026. Read more
The Mexican peso has depreciated against the dollar following the United States' decision not to extend the T-MEC agreement. This development has raised concerns among Mexican officials, including President Claudia Sheinbaum, regarding the potential economic impact on Mexico. The situation is being closely monitored by Banxico Governor Victoria Rodríguez Ceja and other economic authorities. — El Economista, 01 Jul 2026. Read more
In June, the Mexican peso experienced a depreciation of 0.91% against the US dollar. This decline reflects ongoing economic challenges and market fluctuations. The article provides insights into the factors influencing the peso's performance during this period. — El Economista, 01 Jul 2026. Read more
The Mexican peso experienced a notable depreciation throughout June 2026. The article discusses the factors contributing to this decline, although specific figures regarding the extent of the depreciation are not provided. The analysis highlights the implications for the economy and the currency's performance during the month. — El Financiero, 30 Jun 2026. Read more
The article discusses the financial impact following a significant sports event, highlighting the economic benefits and challenges faced by local businesses. It notes that while some sectors experienced a boost, others struggled with increased costs and decreased consumer spending. The analysis includes insights from local economists on the long-term effects of such events on the economy. — El Financiero, 29 Jun 2026. Read more
Mexico's exports increased by 25 percent in May, demonstrating continued strength in the sector. This growth reflects robust demand for Mexican goods in international markets, contributing positively to the country's economic outlook. — El Financiero, 29 Jun 2026. Read more
US Halts USMCA Renewal; There Will Be Annual Reviews: Ebrard — Google News, 03 Jul 2026. Read more
Trump Won't Renew USMCA: What Happens to U.S., Canada & Mexico Trade? — Google News, 02 Jul 2026. Read more
USMCA Review Cycle Deepens Uncertainty for Mexico, Warns Societe Generale — Google News, 02 Jul 2026. Read more
U.S. Declines to Renew Trade Pact With Mexico And Canada. Here's What It Means for Each Country — Google News, 02 Jul 2026. Read more
USMCA 'remains in force,' Ebrard says, as Mexico eyes tariff reductions: Thursday's mañanera recapped — Google News, 02 Jul 2026. Read more
Mexico Drops to 59th in WEF Energy Transition Index — Google News, 02 Jul 2026. Read more
Mexico Manufacturing Exports Drive April Trade Surplus — Google News, 02 Jul 2026. Read more
Mexico’s Export-Led Economy at Risk With Annual USMCA Reviews — Google News, 02 Jul 2026. Read more
US refuses to renew trade pact with Mexico, Canada for ‘trade deficit’ — Google News, 01 Jul 2026. Read more
White House economic council director confident in trade deals with Canada and Mexico — Google News, 02 Jul 2026. Read more
Updated: 2026-06-27 by María López
Key Takeaways
Following the May 7, 2026 decision, Banxico's policy rate stands at 6.50%. After Banxico's May 7 meeting, the target rate remains at 6.50%, following a recent cut of 0.25%. The current policy stance has held steady since then, as the committee grapples with easing headline inflation but remains wary of global inflationary pressures and local economic uncertainties. This marks a pivotal moment in their strategy, as they weigh the need for stimulus against potential inflationary threats and structural weaknesses in the economy.
Relative to the United States, the Fed's target rate now sits at 3.62%, creating a significant rate differential of 2.88%. The Fed's target rate currently stands at 3.62%, reflecting a cautious stance similar to Banxico’s. With a rate differential of 2.88%, this gap creates implications for capital flows, as investors weigh potential returns against risks in both economies. Banxico’s decisions are increasingly influenced by the need to maintain economic stability amid domestic pressures, while the Fed continues its own trajectory of monetary policy adjustments.
The rate differential creates a complex landscape for capital flows and foreign exchange pressures.
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: 2026-07-03 by Alexander Dentler
Key Takeaways
As Banxico approaches its next decision date, the model indicates a substantial chance of no action on the policy rate, with a hold probability at about 58%. With recent updates to our internal expectations, particularly the modal bin shifting from -25bp to ±0bp, the model points toward likely inaction during the upcoming meeting on 05 February 2026. The current expected move indicates a cut of approximately 11bp. This marks a notable swing in sentiment since the last model-based projection, wherein the modal bucket was firmly positioned at -25bp, accompanied by a significant 38.9% probability for that scenario.
Recent data refreshes have provided new insights into key economic indicators. Notably, inflation metrics have shown slight upward pressure, while the exchange rate has remained relatively stable. These developments contribute to the evolving landscape that the committee must navigate as it deliberates policy options.
In terms of influential drivers, the model suggests that the current economic context is shaped by moderate hawkish pressure stemming from rising global inflation, particularly linked to energy prices. Conversely, domestic credit spreads are exerting a slight dovish pull, reflecting market uncertainties. The heightened economic policy uncertainty, especially in light of recent geopolitical developments, has emerged as a critical factor influencing the committee's decision-making process. It is essential to remember that while these drivers provide useful context, the ultimate decision rests on the committee's judgment, which factors in the broader economic landscape.
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: 2026-07-03 by Alexander Dentler
Key Takeaways
As of 2026-07-03, bond prices show the 10Y-3Y spread at 1.46%, marking a notable increase from the previous observation and indicating a stable yield curve amidst cautious market sentiment. The latest yield curve data reveals that the nominal 10Y-3Y spread has increased by 0.12%, while the real spread stands at 0.53%, reflecting a stable yet cautious environment. Notably, the implied inflation spread at 0.93% suggests that market participants expect moderate inflation, with a slight upward trajectory. This positioning indicates that while inflation expectations remain anchored, there is an underlying concern regarding potential inflationary pressures, particularly from rising energy prices.
The curve shape suggests that market participants anticipate a hold on the policy rate, consistent with the cautious approach reflected in Banxico's recent communications. Markets appear to be pricing in a likely hold on the policy rate, aligning closely with the committee's neutral stance. However, the persistent structural deficiencies and geopolitical risks may create a disconnect between market signals and the committee's ability to maintain this trajectory. This delicate balance underscores the challenges ahead for policymakers as they navigate these mixed signals while striving for economic stability.
Yield Spread Update
| Spread (10Y−3Y) | 01 Jul | 02 Jul 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.36 | 1.46 | +0.100 | 1.23 |
| Real | 0.55 | 0.53 | -0.019 | 0.97 |
| Inflation | 0.81 | 0.93 | +0.119 | 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: 2026-06-25 by María López
Key Takeaways
The mid-June 2026 CPI release shows headline inflation at 3.58%, landing within Banxico's target band yet revealing a downward trend. The mid-June 2026 CPI release shows headline inflation at 3.58%, around the 29th percentile, and comfortably within Banxico's 2%-4% target band. This rate marks a decrease of 0.10 from the previous release, continuing a six-month streak of declining growth. While the current figure indicates some relief for consumers, it also highlights that inflation dynamics are still at play, with pressures likely lingering beneath the surface.
Core inflation, which excludes volatile food and energy prices, remains higher than headline figures, suggesting persistent underlying price pressures. Core inflation, which excludes volatile components, is currently at 4.21%, sitting in the 67th percentile. This marks a slight decrease of 0.01 compared to the last reading, indicating a divergence from the headline rate. The core figure is still above the 3% target, reflecting that while headline inflation shows signs of easing, the underlying inflationary pressures remain a concern for policymakers, necessitating careful monitoring.
Trade prices reveal a stark contrast, with export prices surging while import prices stabilize, indicating complex global market interactions. Trade prices are experiencing significant movements, particularly with export prices soaring to 15.25%, placing them in the 93rd percentile. This reflects a 0.12 increase from last month and underscores the strong international demand dynamics, which can impact domestic inflation. Meanwhile, import prices are up at 4.41%, indicating that while imports are becoming pricier, they are not rising as sharply as exports, complicating the inflation narrative further.
| 1H Jun 2026 | 1H Jun 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 3.6 | — | — | 4.7 | 4.7 | +0.00 |
| Core CPI | 4.2 | — | — | 4.2 | 4.2 | +0.00 |
| Export Price Index | — | — | — | 4.9 | 4.9 | +0.00 |
| Import Price Index | — | — | — | 5.0 | 5.0 | +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 69 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 69 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 1.09 vs 1.03 naive, n=69); Core CPI (RMSE 0.65 vs 1.07 naive, +39% improvement, n=69); 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: 2026-06-26 by Alexander Dentler
Key Takeaways
The recent update from the SHF House Price Index reveals significant insights into the state of the housing market, particularly with the new observation of 8.71% YoY inflation as of 2026-01-01. This level of house price inflation exceeds historical averages, positioning itself in the 75th percentile since 2006. In comparison, headline CPI inflation stands at 3.94% while housing CPI inflation is at 3.61%, suggesting that house prices are rising notably faster than general inflation metrics. This divergence reflects the ongoing demand pressures in the housing sector, despite a slight decline of 0.21 percentage points from the previous quarter.
The DFM nowcast provides valuable context, estimating house price inflation at 8.65% YoY as of 2026-05-01. This nowcast aligns closely with the latest observed value, indicating that auxiliary indicators such as mortgage lending and housing CPI are confirming the current trajectory rather than suggesting any significant upward or downward pressure. The model's consistency with observed data suggests that the dynamics within the housing market remain robust and supportive of sustained inflationary trends.
DFM Nowcast Comparison
| Observed | Nowcast | Prev. Nowcast | Gap | Revision | |
|---|---|---|---|---|---|
| SHF House Price Inflation (YoY) | 8.71% | 8.65% | 8.65% | -0.06 | +0.00 |
Observed: 2026-Q1. Nowcast: 2026-05. Previous nowcast: 2026-05. "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: 2026-06-06 by María López
Key Takeaways
Brent oil prices just jumped to $106.30 as of May 2026, reflecting a staggering YoY increase of 65.8%. Brent oil prices through May 2026 show a notable rise, landing at $106.30. This marks a significant YoY change of +65.8%, and the momentum is clearly up, with prices climbing in recent days. For Mexico, where oil is a major export and accounts for about 15% of federal revenue, these figures are crucial — they could bolster government finances and Pemex operations.
Copper prices are hitting $13,483.75, up 41.5% YoY as of May 2026. With copper data updated to May 2026, the current price stands at $13,483.75, showcasing a robust YoY increase of 41.5%. The trend remains upward, indicating strong demand in the global market. Given that Sonora dominates copper production in Mexico, this surge could enhance regional economic activity, despite the sector's small employment footprint.
Corn prices are at $215.62, reflecting a modest YoY increase of 5.3%. As of May 2026, corn prices reached $215.62, showing a slight YoY rise of 5.3%. The trend appears stable, neither soaring nor plummeting significantly. This is particularly relevant for Mexico, where corn is a staple for many, and price stability is key for the 1.5 million smallholder farmers dependent on this crop.
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: 2026-06-24 by Ignacio Crane
Key Takeaways
The April 2026 IMSS release shows unit labor costs at 3.34%, indicating that wages are growing faster than productivity. Following April's formal sector wage data, ULC in manufacturing is rising, reflecting a modest deceleration in productivity gains. The growth rate increased by 0.47, positioning it in the 79th percentile historically. This suggests potential cost-push inflation pressures that could affect the competitiveness of the manufacturing sector moving forward.
Real wages in the formal sector rose to 4.49%, signifying an improvement in purchasing power for workers. This increase in real wages indicates positive gains for households, enhancing their ability to sustain consumption amid rising costs. While the overall trend is encouraging, it is essential to acknowledge that the year-over-year growth has diminished slightly by 1.7%, which could temper expectations for sustained gains.
Across sectors, a notable divergence emerges as retail outperforms manufacturing in real wage growth. Retail real wages have grown at a commendable 4.49%, contrasting sharply with manufacturing's 3.12%. This divergence underscores the contrasting dynamics within the labor market, where retail workers are benefitting more significantly from wage increases, while manufacturing remains constrained by rising labor costs.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 0.3 | 0.3 | +0.00 |
| ULC Retail | — | — | — | 1.4 | 1.4 | +0.00 |
| Real Wage Mfg | — | — | — | 3.0 | 3.0 | +0.00 |
| Real Wage Retail | — | — | — | 4.3 | 4.3 | +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: 2026-06-19 by Pablo Rivas
Key Takeaways
Following the recent updates in key economic indicators, real GDP growth in Mexico is now estimated at 4.96%, reflecting a robust upward revision of 2.66%. The latest quarterly GDP release from INEGI shows a marked increase in growth expectations, signaling a healthier economic outlook. This adjustment highlights a strong recovery trajectory, likely driven by resilient domestic consumption and improved industrial performance. As we advance into Q1 2026, this optimistic figure may bolster confidence among investors and policymakers alike.
Private consumption continues to be a key driver of growth. Household spending is estimated to have soared to 8.09%, significantly outpacing GDP growth. This robust expansion suggests that consumers are confident and willing to spend, providing essential support to overall economic activity. Such vigor in private consumption is a positive sign, signaling a thriving domestic market that can help buffer against external shocks.
Exports are struggling to keep up with domestic demand. External demand remains tepid, with export growth now at a mere 0.58%. This lackluster performance raises concerns about Mexico's competitiveness in the global market, especially as trading partners navigate their own economic uncertainties. The soft export figures could hint at challenges ahead for sectors reliant on international trade, potentially dampening the overall growth outlook.
Imports are indicating a shift in domestic absorption patterns. Imports have contracted to 1.56%, reflecting a 3.81% decline from previous estimates. This downturn signals a potential cooling in domestic demand, as consumers and businesses may be becoming more cautious in their spending habits. The drop in imports could also suggest that the economy is adjusting to current market conditions, though it may raise questions about future growth sustainability.
Net trade dynamics appear to be shifting. The trade balance contribution remains a mixed bag, as the decline in imports coupled with stagnant export growth presents a complex scenario. While fewer imports can ease some pressure on the trade deficit, the sluggish export performance raises flags about Mexico's economic resilience in a challenging global landscape. Policymakers will need to monitor these trends closely to ensure balanced and sustainable growth.
DFM GDP Nowcasts
| Component | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 6.19% | 4.96% | 4.96% | +0.00 |
| Private Consumption | 0.15% | 8.09% | 8.09% | +0.00 |
| Imports | 25.37% | 1.56% | 1.56% | +0.00 |
| Exports | 0.58% | 0.58% | 0.58% | +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: 2026-07-03 by Alexander Dentler
Key Takeaways
The latest ENOE survey for January 2026 reveals a notable resilience in the Mexican labor market as the unemployment rate remains at 2.51%, reflecting a low percentile historically. The January 2026 ENOE survey shows unemployment at 2.51%, which is around the 1st percentile of its historical range. This figure represents a decline of -0.0158% compared to December 2025, continuing a downward trend observed over the past year, where it has decreased by -0.22%. Such persistently low unemployment rates might suggest a tightening labor market, which could have implications for wage pressures and consumer spending.
By gender, the unemployment landscape presents a nuanced picture, with male unemployment at 3.35%, significantly higher than female unemployment at 3.51%. Male and female unemployment rates show a divergence, with males registering at 3.35%—around the 86th percentile—while females are at 3.51%, around the 14th percentile. This disparity highlights the ongoing challenges faced by male workers in securing employment relative to their female counterparts, suggesting potential sectoral or demographic influences at play.
The share of informal workers remains elevated, signaling persistent structural issues in the labor market. Informal employment in January 2026 stands at 55.7%, which is around the 96th percentile of its historical range. This marks an increase of 0.132% from the previous month, indicating a rising trend in informality. The prevalence of informal employment often points to underlying economic vulnerabilities and may complicate efforts to achieve sustainable growth and improve job quality.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q2 2026) | Nowcast (Q2 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.56% | 2.51% | — | — |
| Underemployment Rate | 10.28% | 12.17% | — | — |
| Male Unemployment | 2.45% | 3.35% | — | — |
| Female Unemployment | 2.71% | 3.51% | — | — |
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 20 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 20 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 22.27 vs 0.13 naive, n=17); 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: 2026-06-12 by María López
Key Takeaways
INEGI's Q2 2026 productivity release shows secondary sector output at 102, reflecting a solid 2.13% increase from the previous month. The latest INEGI productivity data for Q2 2026, released on June 12, reveals that secondary sector output is holding strong, driven by notable gains in construction and manufacturing. This growth is broad-based, with the construction sector leading the charge, signaling resilience against inflationary pressures. Meanwhile, mining lags behind, indicating potential instability in that subsector.
Manufacturing composites show a mixed bag of trends, highlighting sustainability concerns. Across the PCA indices, productivity dipped slightly while sales and inventory dynamics suggest a tightening labor market. The divergence in labor demand—currently at a low of -1.49—raises red flags about future growth potential, especially as rising inventory levels could indicate overproduction risks.
Within manufacturing, construction shines while the chemical industry struggles. The top-performing subsectors include construction, which is at the 99th percentile, showing a whopping 7.76% increase, while the chemical industry underperforms in the 21st percentile, down 7.74%. The robust construction output significantly bolsters the overall manufacturing index, but the decline in chemicals underscores the volatility and challenges facing specific industries.
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: 2026-07-03 by Alexander Dentler
The June 2026 consumer confidence survey shows the general index at 1.12, reflecting elevated sentiment at the 85th percentile. INEGI's latest June 2026 release reveals confidence at 1.12, reflecting elevated sentiment at the 85th percentile. This index rose by 0.11 compared to May, indicating a positive shift in consumer attitudes. However, the durable goods index at 1.72 suggests particularly strong confidence in this area, contrasting with the housing-specific index, which has dropped to 0.10. This divergence may reflect consumers' prioritization of immediate purchases over long-term investments amid ongoing economic uncertainties.
PCA Confidence Indices
| Index | May 2026 | Jun 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.01 | 1.12 | +0.11 |
| Housing Appetite | 0.34 | 0.10 | -0.24 |
| Durables Appetite | 1.29 | 1.72 | +0.43 |
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: 2026-07-02 by Alexander Dentler
Key Takeaways
The June 2026 SPF survey reveals a modest decline in economic concerns. The June 2026 SPF survey shows the aggregate Concern Index at 2.83, placing it around the 63rd percentile. This marks a decrease of -0.13 from the previous month, suggesting a slight easing in overall economic anxieties. Nonetheless, the index has experienced a downward trend over the past two months, indicating persistent underlying concerns among economic observers.
The latest survey highlights significant constraints on growth, particularly in public security and trade policy. Economists have identified public insecurity as the top constraint, currently accounting for 9.2% of concerns, followed closely by US trade policy at 8.2%. Notably, public insecurity has decreased by -0.46 from the previous month, while US trade policy has seen a substantial increase of +1.80, underscoring its growing impact on economic sentiment.
Recession concerns remain moderate, reflecting a cautious outlook among economists. The perceived probability of recession stands at 10.0%, which is moderate compared to historical norms. This indicates a stable sentiment among surveyed economists when juxtaposed with the previous quarter, suggesting that while fears exist, they are not at alarming levels. The outlook for the next quarter is slightly more pronounced at 15.0%, indicating a potential uptick in recession fears.
Expectations regarding the peso's valuation indicate a prevailing sense of overvaluation among forecasters. According to forecasters, the current FX forecast misalignment reflects a perceived overvaluation of the peso, with a deviation of +0.058. This sentiment is consistent across multiple horizons, as forecasters anticipate a similar pattern in the following months, suggesting a sustained outlook of a weaker peso than expected.
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: 2026-07-03 by Alexander Dentler
Key Takeaways
Mexican equity markets as of July 3, 2026, show excess returns at -0.2169, reflecting a notable decline in market performance alongside realized volatility reported at 0.0122. With data through July 3, 2026, Mexican equity markets exhibit excess returns at -0.2169, marking a significant downturn in investor sentiment. Realized volatility has reached 0.0122, underscoring a period of elevated market fluctuations. The illiquidity index rose sharply, now at 147.1455, indicating increasing difficulty in executing trades without impacting prices. This combination of declining returns and rising volatility highlights the precarious nature of the current investment landscape.
The decomposition shows that recent volatility has been significantly influenced by US policy shocks and liquidity constraints, alongside persistent real-sector difficulties. Recent volatility has been driven by key contributors such as US policy shocks, which have reverberated through the Mexican markets, alongside persistent challenges within the real sector. The contribution from liquidity and financing constraints remains a critical factor, fostering an environment where market participants are increasingly reactive. This volatility reflects not only immediate economic conditions but also the broader implications of global economic policy shifts.
Investor sentiment has turned increasingly cautious, with levels of policy uncertainty rising significantly in recent weeks. Policy uncertainty remains a pressing issue, with investor sentiment reflecting growing trepidation as the EPU index indicates heightened levels of anxiety regarding economic stability. The current discourse suggests that many market participants are grappling with concerns over public security and the government's economic policy responses. This rising uncertainty could potentially lead to increased volatility, as stakeholders adjust their expectations and strategies in a rapidly changing environment.
Volatility Measures
| Measure | Jun 2026 | Jul 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.1336 | 0.0529 | +0.1865 | US Policy Shocks (+0.127) |
| Realized Volatility | 0.0094 | 0.0084 | -0.0010 | Liquidity and Financing (+0.001) |
| Illiquidity (Amihud) | 99.0727 | 50.5051 | -48.5675 | Real-Sector Difficulties (-14.059) |
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: 2026-07-03 by Alexander Dentler
Key Takeaways
Banxico's July 2026 credit release shows money market spreads at a narrowed level compared to previous months, reflecting a cautious lending environment. Following the latest July lending data, rate premia indicate that money market spreads have tightened slightly. The TIIE 28-day and 91-day rates stand at 0.28% and 0.32%, respectively, while the bank funding rate is at 0.05%. This narrowing trend, with a recent decrease of 0.0386, suggests a more favorable borrowing environment, albeit still at the lower end of historical ranges, which could enhance liquidity for borrowers in the non-financial private sector.
Household mortgage rates remain elevated, signaling continued challenges for potential homeowners. The total annual cost of mortgages, measured by the CAT, currently averages 14.0%, with a range from 10.7% to 28.2%. This persistent cost structure indicates limited pass-through from the policy rate to mortgage borrowers, affecting affordability and potentially dampening housing market activity as households grapple with higher financial burdens.
Debt issuance patterns show a preference for fixed-rate financing, reflecting shifts in corporate funding strategies amid economic uncertainty. Current data indicates that fixed-rate debt comprises 19.47% of corporate financing, while variable rates account for 19.82% collectively. This balance suggests that firms are increasingly opting for the stability of fixed-rate instruments in light of potential interest rate fluctuations, while a significant reliance on variable rates may indicate a lagging sector still exposed to rate volatility.
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.
