Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-06-19
Gold prices fell as the market reacted to the strict monetary policy stance of the Federal Reserve. Fed Chair Jerome Powell's comments have intensified concerns about future interest rate hikes, impacting investor sentiment towards gold. The article highlights the ongoing pressure on gold prices amid these developments. — El Economista, 19 Jun 2026. Read more
The Mexican peso has depreciated as markets await updates regarding a potential truce between the United States and Iran. This development has created uncertainty in the financial markets, impacting the peso's value. Investors are closely monitoring the situation for any implications on trade and economic relations. — El Economista, 18 Jun 2026. Read more
The Federal Reserve's serious stance on raising interest rates has led to a depreciation of the Mexican peso. The article discusses the extent of the peso's loss against the dollar today, highlighting the market's reaction to the Fed's comments. No specific figures regarding the exchange rate or the extent of the loss are provided. — El Financiero, 18 Jun 2026. Read more
Victoria Rodríguez Ceja, Governor of Banxico, highlighted the potential risks associated with the use of artificial intelligence in the Mexican financial system. The central bank's warning addresses concerns that range from user vulnerabilities to the implications for banks. The statement emphasizes the need for careful consideration and regulation of AI technologies in financial services. — Expansión, 18 Jun 2026. Read more
Colombia's economy experienced a year-on-year growth of 3.4% in April. This growth reflects the ongoing recovery and resilience of the Colombian economy amid various challenges. The report highlights key sectors contributing to this growth, although specific details on these sectors were not provided. — El Economista, 18 Jun 2026. Read more
Japan's inflation rate held steady in May, showing no significant changes compared to previous months. This stability in inflation is notable as the country continues to navigate its economic challenges. The Bank of Japan's policies remain under scrutiny as they aim to achieve their inflation targets. — El Economista, 19 Jun 2026. Read more
Wall Street ended the trading session with losses following the Federal Reserve's projection of higher inflation in the United States. Investors reacted negatively to the Fed's outlook, which raised concerns about future monetary policy adjustments. The market's decline reflects uncertainty surrounding economic conditions and inflationary pressures. — El Economista, 17 Jun 2026. Read more
Single-family home construction in the United States fell in May to its lowest level in eight months. This decline reflects ongoing challenges in the housing market, impacting builders and potential homeowners alike. — El Economista, 16 Jun 2026. Read more
The Mexican peso has shown signs of stabilization following a provisional agreement between the United States and Iran. This development has contributed to a calmer financial environment, alleviating some immediate pressures on the currency. Analysts suggest that the agreement may have positive implications for regional economic stability. — El Financiero, 15 Jun 2026. Read more
A recent peace agreement has positively impacted the Mexican peso, leading to its strengthening against the dollar. Concurrently, this development has resulted in a decline in oil prices, reflecting the market's response to the improved political stability in the region. — El Economista, 15 Jun 2026. Read more
The USMCA Review Will Be a China (and Asia) Policy Test for Mexico — Google News, 18 Jun 2026. Read more
Canada calls for US and Mexico free trade agreement to be renewed for 16 years — Google News, 18 Jun 2026. Read more
US Dollar vs Mexican Peso holds steady as Federal Reserve publishes new daily US interest rate data — Google News, 17 Jun 2026. Read more
IMF Warns Energy Recovery Will Lag Even After US-Iran Ceasefire — Google News, 17 Jun 2026. Read more
Jordan, Mexico Discuss Trade, Investment Cooperation — Google News, 17 Jun 2026. Read more
Mexico seeks lower US tariffs in trade pact talks — Google News, 16 Jun 2026. Read more
RBC CEO downplays tensions, confident Canada-U.S.-Mexico trade will last — Google News, 16 Jun 2026. Read more
USMCA Review Proceeds Despite Trump's Doubts: Ebrard — Google News, 16 Jun 2026. Read more
US, Mexican officials to discuss agriculture, energy as Trump casts doubt on trade deal — Google News, 16 Jun 2026. Read more
Mexico’s gripe with US trade pact: Japan has better deal — Google News, 16 Jun 2026. Read more
Updated: 2026-06-19 by Pablo Rivas
Key Takeaways
Following the May 7, 2026 decision, Banxico's policy rate stands at 6.50%, reflecting a recent cut of 0.25%. After Banxico's May 7 meeting, the target rate was adjusted downward, aligning with the broader shift towards easing monetary policy in response to cooling economic indicators. The current policy rate of 6.50% follows a cumulative decline of 0.50% since March 2026, showcasing a shift towards a more accommodative stance as inflation expectations remain anchored despite underlying risks. The committee is treading carefully, balancing immediate economic concerns against the potential for inflationary shocks.
Relative to the United States, the Fed's target rate remains at 3.62%, creating a rate differential of 2.88% in favor of Mexico. The Fed's current stance underscores a more cautious approach in the U.S. as it assesses the economic landscape, while Banxico has opted for a more proactive strategy, reducing its rate to stimulate growth amidst domestic challenges. This divergence raises questions about policy coordination and the potential for capital flows seeking higher yields in Mexico, complicating the economic outlook for both nations. The interplay between these two monetary policies will be crucial as they navigate their respective economic pressures.
The rate differential between Banxico and the Fed has implications for capital flows and foreign exchange pressures. The rate differential suggests that Mexico could remain an attractive destination for capital, provided that the prevailing economic uncertainties do not escalate further. However, with public security issues dominating recent discourse, there's a delicate balance to strike between fostering investment and ensuring a stable macroeconomic environment. As Banxico approaches its next meeting, the interplay of these factors will be critical in shaping policy decisions moving forward.
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: 2026-06-19 by Pablo Rivas
Key Takeaways
With recent data indicating a hold on the policy rate, the model suggests a substantial chance of no action at the upcoming June 25 meeting. As we approach the next decision date, the model points toward likely inaction, with about 58% probability of holding rates steady, while an 85% chance suggests a slight adjustment of -4bp could be in the cards. Since our last update, the expected move has swung from a more dovish tilt towards this hold, underscoring the prevailing uncertainty in the economic landscape. The modal bin now sits at ±0bp, with the next most probable action being a cut of -25bp at roughly 38.9%.
In terms of recent data, we’ve seen some shifts that might catch our attention. Recent observations highlight that the CPI remains stable, while bond yields reflect a slight uptick. These changes, while material, do not drastically alter our current outlook, as the broader economic indicators maintain a consistent narrative.
Diving deeper into the drivers, the landscape is a bit mixed with pressures coming from various angles. The model reveals moderate hawkish pressure stemming from exchange rate fluctuations, while economic policy uncertainty continues to exert a slight dovish pull. The ongoing concerns about public security are weighing on market sentiment, creating a backdrop of hesitation among investors. Notably, the policy-uncertainty proxy shows significant influence today, as the committee grapples with the complex interplay between immediate economic needs and the looming threat of inflationary shocks.
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: 2026-06-19 by Pablo Rivas
Key Takeaways
Bond prices as of 2026-06-19 show the 10Y-3Y spread at 1.16%, reflecting a slight decline of 0.14% from the previous observation. The latest yield curve data reveals that the nominal 10Y-3Y spread has narrowed, while the real spread stands at 0.51%, indicating that inflation expectations remain in check with an implied inflation spread of 0.65%. This suggests that while market participants are not overly concerned about rising prices, there’s a cautious sentiment lingering in the air. Additionally, the nominal spread's current status indicates it remains in 'normal' territory, despite its recent downward trend, which could reflect some market jitters ahead of Banxico's upcoming policy decisions.
The curve shape suggests a cautious alignment with expected policy moves, hinting at a hold on the policy rate. Markets appear to be pricing in a stable policy outlook as the narrowing spreads align with an 85% probability of a hold in the upcoming Banxico meeting. However, the disconnect between easing labor market signals and persistent concerns over public security and economic policy uncertainty could create a tension that policymakers need to navigate carefully. This raises questions about whether the Bank will prioritize immediate economic stability or remain vigilant against potential inflationary pressures.
Yield Spread Update
| Spread (10Y−3Y) | 17 Jun | 18 Jun 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.20 | 1.16 | -0.037 | 1.39 |
| Real | 0.47 | 0.51 | +0.038 | 1.13 |
| Inflation | 0.73 | 0.65 | -0.076 | 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: 2026-06-10 by Alexander Dentler
Key Takeaways
The mid-May 2026 CPI release shows headline inflation at 3.71%, continuing to reflect stability within Banxico's target range. The mid-May 2026 CPI release shows headline inflation at 3.71%, placing it in the 34th percentile and well within Banxico's 2%-4% target band. This figure marks a decline of -0.28 from the previous month, indicating a continued easing trend in consumer price growth. The recent five-month downward streak in headline inflation suggests a dampening of cost-of-living increases, which could provide a more favorable backdrop for monetary policy considerations as Banxico approaches its upcoming meeting.
Core inflation, which excludes volatile food and energy prices, presents a more complex picture. Core inflation, which excludes volatile components, stands at 4.23%, reflecting a modest decrease of -0.05 from the previous month. This level is above the target, diverging from headline inflation, which indicates underlying inflationary pressures remain more persistent. The slight reduction in core inflation suggests that while there is some easing, it is not sufficient to align core prices with Banxico's target, necessitating careful monitoring as policymakers weigh their options.
Trade prices have shown notable shifts, particularly in export prices. Trade prices have experienced significant movements, with export prices rising to 15.25%, placing them in the 93rd percentile historically. This increase, a reflection of strong global demand dynamics, underscores the interconnectedness of domestic inflation with international market trends. Meanwhile, import prices also climbed to 4.41%, further complicating the inflation landscape for Banxico as they navigate the pressures from both domestic and external sources.
| 2H May 2026 | 2H May 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 3.7 | — | — | 4.7 | 4.7 | +0.00 |
| Core CPI | 4.2 | — | — | 4.2 | 4.2 | +0.00 |
| Export Price Index | — | — | — | 5.0 | 5.0 | +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 68 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 68 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 1.10 vs 1.04 naive, n=68); Core CPI (RMSE 0.66 vs 1.08 naive, +39% improvement, n=68); 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: 2026-06-06 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: 2026-06-17 by Ignacio Crane
Key Takeaways
The April 2026 IMSS release shows unit labor costs at 3.34%, signaling a potential cost-push inflation pressure. Following April's formal sector wage data, ULC in manufacturing is rising, suggesting that wages are outpacing productivity gains. The current level places ULC in the 79th percentile, with a month-over-month increase of 0.47. This trend implies escalating cost pressures for manufacturers, which could undermine competitiveness in the sector.
Real wages in the formal sector indicate a modest but positive improvement in purchasing power. The latest data reveals real wage growth in manufacturing at 3.12%, suggesting gains for households despite a recent decline of 1.04 month-over-month. This positive trajectory in purchasing power is significant, as it supports consumer spending, a vital component of economic stability.
Across sectors, a pronounced divergence is evident in real wage dynamics. Manufacturing is outperforming retail, with real wages growing at 3.12% compared to retail's 3.35%. This disparity underscores the challenges faced by the retail sector, which has seen more modest gains, potentially reflecting differing pressures from cost dynamics and market conditions.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 0.7 | 0.7 | +0.00 |
| ULC Retail | — | — | — | 0.7 | 0.7 | +0.00 |
| Real Wage Mfg | — | — | — | 2.9 | 2.9 | +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: 2026-06-19 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: 2026-06-19 by Pablo Rivas
Key Takeaways
The latest ENOE survey for April 2026 shows unemployment at a record high of 3.44%, unchanged from the previous month. The latest ENOE survey for April 2026 shows unemployment at 3.44%, around the 100th percentile and a record high. This figure has remained stable compared to last month, indicating an unusual lack of movement in a typically dynamic labor market. The stagnation at such a high level raises questions about employment opportunities and economic resilience as we head into the latter half of the year.
By gender, the unemployment rates illustrate a nuanced picture of the labor market. Male and female unemployment rates are currently at 3.35% and 3.51%, respectively, with males slightly faring better. The gap between genders remains tight, but the male unemployment rate has seen a recent uptick, suggesting that the pressures of the current economic climate are impacting men slightly more than women at this moment.
The share of informal workers continues to climb, signaling potential vulnerabilities in job security. Informal employment has risen to 55.7%, reflecting a concerning trend that indicates more workers are turning to less stable jobs. This increase in informality could be a response to the high unemployment rate, as individuals seek any available work, albeit without the protections afforded to formal employment. Such a shift raises alarms about the long-term stability of the labor market and the broader economy.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q2 2026) | Nowcast (Q2 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.56% | 3.44% | — | — |
| 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: 2026-06-05 by María López
INEGI's latest May release reveals confidence at an elevated level of 1.04, but that's down from last month, signaling a notable dip in consumer sentiment. The May 2026 consumer confidence survey shows the general index at 1.04, placing it in the 81st percentile—still elevated, but it fell by 0.19 compared to April. This decline signals growing unease among consumers, with the housing-specific index suffering a sharper drop of 0.37, reflecting mounting concerns in that sector. While durable goods confidence remains robust at 1.02, up slightly, the divergence highlights that housing sentiment is dragging down the overall picture. With such a significant gap, it’s clear consumers are more hesitant about housing investments amid ongoing economic uncertainties.
PCA Confidence Indices
| Index | Apr 2026 | May 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.22 | 1.04 | -0.19 |
| Housing Appetite | 0.69 | 0.32 | -0.37 |
| Durables Appetite | 0.94 | 1.02 | +0.08 |
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: 2026-06-02 by Ignacio Crane
Key Takeaways
The May 2026 SPF survey shows the aggregate Concern Index at 2.96, reflecting a modest decline in sentiment. The May 2026 SPF survey shows the aggregate Concern Index at 2.96, corresponding to the 65th percentile. The index fell by 0.0141 from the previous month, suggesting a slight easing of concerns among economic forecasters. This decline, while modest, is indicative of a broader trend of stabilization after a period of heightened anxiety in earlier months.
Economists have identified public insecurity, US trade policy, and a lack of structural change as the primary growth constraints currently impeding progress. The key constraints currently cited include public insecurity at 9.6%, US trade policy at 6.4%, and a lack of structural change at 4.8%. Notably, public insecurity experienced the largest month-over-month increase of 1.00%, underscoring the persistent challenges that this issue poses for economic stability and growth.
The perceived probability of recession remains moderate among surveyed economists, reflecting a cautious outlook. The perceived probability of recession stands at 20.0%, placing it within the 68th percentile historically. This level of concern is subdued relative to historical norms, suggesting that while apprehensions exist, they are not at alarmingly high levels. The probability remains consistent with the previous quarter, indicating stability in the economic outlook despite underlying uncertainties.
According to forecasters, there is a consensus that the peso is currently overvalued, reflecting ongoing concerns about its exchange rate trajectory. FX expectations suggest that forecasters view the peso as overvalued, with current-month misalignment at +0.097. This perception of overvaluation persists across horizons, indicating a sustained skepticism about the currency's real value in the near term. Such sentiments could influence investor behavior and overall economic sentiment moving forward.
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: 2026-06-19 by Pablo Rivas
Key Takeaways
Mexican equity markets as of June 19, 2026, show excess returns at -0.2169, reflecting a significant dip amid growing uncertainty. With market data through June 19, 2026, excess returns have fallen sharply, down by 0.478 from the previous month. Realized volatility is currently at 0.0122, indicating a notable increase that keeps us in the upper echelons of historical volatility. The latest moves underscore a climate of caution as market participants brace for the upcoming Banxico decision, with an 85% likelihood of a hold on the policy rate. These conditions are not just numbers on a page; they resonate with the rising anxiety surrounding economic policy and public security.
The decomposition shows that recent volatility has been largely driven by US policy shocks and liquidity concerns. Top contributors to the shifting landscape include ongoing investor sentiment challenges and pressures from real-sector difficulties that have emerged as persistent themes. As these factors intertwine, they paint a complex picture where liquidity and external policy shifts weigh heavily on market expectations. The growing divergence of these contributors signals a need for vigilance among investors as we navigate these turbulent waters.
Investor sentiment has taken a hit, with rising policy uncertainty casting a long shadow over market dynamics. The latest readings from the Economic Policy Uncertainty index reflect heightened anxiety among market participants, echoing the alarmist tones circulating in financial discussions. As uncertainty levels climb, the potential for volatility increases, leaving investors on edge. This environment is further exacerbated by public security concerns, which are dominating discourse and influencing economic outlooks.
Volatility Measures
| Measure | May 2026 | Jun 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | 0.0283 | -0.0585 | -0.0868 | US Policy Shocks (+0.127) |
| Realized Volatility | 0.0093 | 0.0098 | +0.0006 | Liquidity and Financing (+0.001) |
| Illiquidity (Amihud) | 94.5836 | 96.9453 | +2.3617 | Real-Sector Difficulties (-14.261) |
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: 2026-06-19 by Pablo Rivas
Key Takeaways
Banxico's June 2026 credit release shows money market spreads tightening, indicating a shift in lending conditions. Following the latest June lending data, rate premia are currently at 0.175, reflecting a narrowing trend of -0.032 from the previous month. This tightening in spreads suggests that funding costs are becoming more favorable for borrowers, which may encourage increased lending activity. However, this optimistic signal comes amidst growing economic policy uncertainty, making it crucial for market participants to remain vigilant.
Household mortgage rates remain elevated, presenting affordability challenges for potential buyers. The total annual cost of mortgages (CAT) averages 14.0%, spanning from a minimum of 10.7% to a maximum of 28.2%. With these levels, the pass-through from the policy rate to mortgage rates indicates that borrowers are facing significant costs, potentially dampening demand in the housing market. As the policy rate holds steady, the implications for affordability are stark, especially for first-time buyers.
Debt issuance patterns show a preference for fixed-rate financing among corporations, reflecting market confidence and stability concerns. Current data reveals that fixed-rate debt comprises 19.47% of total issuance, while variable rates account for 19.82% collectively. This preference for fixed-rate instruments signals that firms are seeking to lock in costs amidst fluctuating interest rates, which can provide a buffer against future rate hikes. However, the significant drop in overall debt issuance normalized by GDP indicates that companies are cautiously navigating the current economic landscape.
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.
