Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-04-17
BBVA has cautioned that potential annual reviews of the T-MEC could hinder the appreciation of the Mexican peso. The bank highlighted concerns regarding the implications of these reviews on Mexico's economic stability and currency performance. — El Financiero, 17 Apr 2026. Read more
The Mexican peso closed stable against the dollar as the market remained attentive to developments in the Middle East. Investors are closely monitoring geopolitical tensions, which could impact currency fluctuations. No specific figures or rates were mentioned in the article. — El Economista, 16 Apr 2026. Read more
The Mexican Treasury has unveiled a plan aimed at containing the rising prices of basic goods. This initiative includes measures to stabilize supply chains and enhance market transparency. The government emphasizes its commitment to protecting consumers amid ongoing inflationary pressures. — El Financiero, 16 Apr 2026. Read more
The Mexican peso has achieved a notable milestone by gaining against the US dollar for nine consecutive sessions. The exchange rate closed today at a specific value, reflecting the peso's strength in the currency market. This trend highlights the ongoing performance of the peso amidst current economic conditions. — El Financiero, 16 Apr 2026. Read more
The Mexican Treasury has attributed the recent inflationary spike to seasonal factors. Officials noted that these fluctuations are typical during certain periods of the year, emphasizing that they do not reflect a long-term trend. The statement aims to clarify concerns regarding the current economic situation. — El Economista, 16 Apr 2026. Read more
Wall Street ended the trading session with gains following a significant agreement between Israel and Lebanon. The Mexican Stock Exchange (BMV) also experienced an increase, reflecting positive investor sentiment. This development is seen as a stabilizing factor in the region, contributing to the overall market performance. — El Financiero, 16 Apr 2026. Read more
The Mexican peso has shown a slight increase against the US dollar as markets remain focused on developments in the United States and Iran. Investors are closely monitoring the geopolitical situation and its potential impact on economic conditions. The article highlights the cautious sentiment among traders amid ongoing uncertainties. — El Economista, 15 Apr 2026. Read more
The Mexican peso has appreciated against the US dollar, driven by optimism surrounding a potential agreement between the United States and Iran. This development reflects market sentiment and could influence future economic interactions. The article highlights the impact of geopolitical events on currency movements. — El Economista, 14 Apr 2026. Read more
Banco Nacional de Comercio Exterior is revising its operational strategy to enhance support for Mexican exporters. The bank aims to adapt to changing market conditions and improve financial services. President Claudia Sheinbaum emphasized the importance of strengthening international trade relations during the announcement. — Expansión, 12 Apr 2026. Read more
The article discusses the recent fluctuations in debt markets, highlighting the impact of rising interest rates and investor sentiment. It notes that these changes have led to a reassessment of risk among investors. Additionally, the article mentions the role of central banks in influencing market dynamics, particularly in the context of ongoing economic adjustments. — Expansión, 12 Apr 2026. Read more
US to Confront Mexico Offshoring in Trade Talks — Google News, 17 Apr 2026. Read more
U.S. And Mexico Seek To Deepen Trade Relations – Analysis — Google News, 17 Apr 2026. Read more
Mexican Business Leaders Urge US Trade Chief to Exempt Mexico from Tariff Investigation — Google News, 16 Apr 2026. Read more
US Trade Representative to Travel to Mexico for USMCA Talks — Google News, 16 Apr 2026. Read more
USMCA Annual Review Risks Halting Mexican Peso Rally, BBVA Says — Google News, 16 Apr 2026. Read more
USTR's Greer says offshoring, rules of origin on agenda for Mexico trade talks — Google News, 16 Apr 2026. Read more
US TRADE REPRESENTATIVE GREER TO TRAVEL TO MEXICO MONDAY AMID USMCA TALKS - MEXICO ECONOMY MINISTER — Google News, 16 Apr 2026. Read more
Mexico expands EU market access under updated trade agreement — Google News, 16 Apr 2026. Read more
Diversification, Trade Expansion and Digital Transformation — Google News, 16 Apr 2026. Read more
Currency Stability and Inflation Trends in Mexico Explained — Google News, 15 Apr 2026. Read more
Updated: 2026-03-28 by Pablo Rivas
Key Takeaways
Following the March 26, 2026 decision, Banxico's policy rate stands at 6.75% after a recent cut of 0.25%. After Banxico's March 26 meeting, the target rate was adjusted downwards to 6.75%. This recent cut represents the first adjustment in a series of meetings where the rate had remained steady for nearly three years. Economists are closely watching how this decision fits into the broader context of declining inflation and ongoing economic uncertainties as the central bank gears up for its next decision on May 7.
Relative to the United States, the Fed's target rate currently sits at 3.62%, creating a rate differential of 3.13%. The Fed's target rate remains at 3.62%, significantly lower than Banxico's 6.75%. This divergence comes as the Fed has held steady since its last cut, reflecting different economic conditions and policy priorities. The first-mover advantage has consistently favored the Fed, influencing capital flows and positioning Banxico in a challenging spot as it considers future adjustments.
The rate differential creates a complex landscape for capital flows and currency pressures. The rate differential at 3.13% suggests a potential draw for foreign capital, yet it also amplifies pressures on the peso amid ongoing economic policy uncertainty. For markets, the implications of this differential may lead to increased volatility as investor sentiment shifts between seeking higher returns and managing risks tied to security and law enforcement issues in Mexico.
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: 2026-04-17 by Pablo Rivas
Key Takeaways
With recent shifts in market sentiment and policy indicators, Banxico's next decision is poised for a cautious hold. With new data from the CPI and recent developments in geopolitical tensions, our model-based expectations suggest a substantial chance of no action in the upcoming Banxico meeting on 05 February 2026, with a mean expected move of -11bp. The hold probability is notably high at about 58%, indicating that markets are gearing up for likely inaction. Since our last update, the modal bucket has shifted to ±0bp, while the -25bp bucket remains relevant at approximately 39%.
Recent observations have provided fresh insights into key economic indicators. The latest updates show that the CPI has been relatively stable, while geopolitical factors continue to swirl around the market. Overall, the necessary data remains current without significant shifts that would alter the outlook drastically.
Several influential drivers paint a complex picture for Banxico's decision-making process. Current conditions indicate slight dovish pressure from the CPI, which is countered by moderate hawkish pressure stemming from rising bond yields. The exchange rate continues to exert a negative influence, while the credit spreads show negligible impact in this context. Additionally, growing economic policy uncertainty is a notable concern that could weigh on the committee's judgment, reminding us that the ultimate decision will hinge on their broader assessment of risks rather than just model mechanics.
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: 2026-04-17 by Pablo Rivas
Key Takeaways
Bond prices as of 2026-04-17 show the 10Y-3Y nominal spread at 1.27%, reflecting a slight dip of 0.06% from the previous observation. The latest yield curve data reveals the nominal and real 10Y-3Y spreads at 1.27% and 0.37%, respectively, while the implied inflation spread stands at 0.90%. The nominal spread remains normal, indicating no immediate inversion, while the real spread has seen a downward trend, which could signal concerns about growth prospects. Meanwhile, the positive implied inflation spread suggests that markets are factoring in some inflation expectations, albeit tempered by current geopolitical uncertainties.
The curve shape suggests a cautious alignment with policy expectations as markets anticipate a hold from Banxico. Markets appear to be pricing in a likely hold from Banxico, with a 90% probability of a -3bp adjustment, reflecting the committee's cautious stance amid rising geopolitical tensions. This steady curve signals that while the market acknowledges the potential for easing, it remains vigilant about inflationary pressures that could disrupt growth—highlighting a delicate balancing act for policymakers.
Yield Spread Update
| Spread (10Y−3Y) | 15 Apr | 16 Apr 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.29 | 1.27 | -0.017 | 0.88 |
| Real | 0.40 | 0.37 | -0.025 | 0.73 |
| Inflation | 0.89 | 0.90 | +0.009 | 0.15 |
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: 2026-04-17 by Pablo Rivas
Key Takeaways
The mid-April 2026 CPI release shows headline inflation at 4.38%, placing it in the 58th percentile and above Banxico's target band of 2%-4%. The mid-April 2026 CPI release shows headline inflation at 4.38%, placing it in the 58th percentile and above Banxico's target band of 2%-4%. This marks a slight decrease of 0.13% from the previous month’s rate, indicating that inflationary pressures may be easing just a tad. However, with the current rate still significantly above the target, it underscores the ongoing challenge for policymakers as they navigate a landscape of stubborn inflation.
Core inflation, which excludes volatile items like food and energy, stands at 4.51%, slightly higher than the headline figure. Core inflation, which excludes volatile components, stands at 4.51%, slightly higher than the headline figure. This rate represents a marginal decrease of just 0.01% from the prior release, suggesting that underlying inflation dynamics are not converging toward the target as quickly as one might hope. With core inflation remaining elevated, it raises concerns about persistent price pressures in the economy, complicating Banxico's decision-making as they weigh potential policy adjustments.
Trade prices are showing intriguing trends, particularly in export prices, which are soaring at a notable 14.31%. Trade prices are showing intriguing trends, particularly in export prices, which are soaring at a notable 14.31%. This marks an increase of 0.07% from the previous month, reflecting strong demand in external markets despite global uncertainties. Meanwhile, import prices are also on the rise at 3.88%, but they lag significantly behind export price growth, indicating that domestic inflation could be influenced more by international developments than by local supply pressures.
| 2H Mar 2026 | 2H Mar 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 4.4 | — | — | 4.9 | 4.9 | +0.00 |
| Core CPI | 4.5 | — | — | 4.4 | 4.4 | +0.00 |
| Export Price Index | — | — | — | 6.2 | 6.2 | +0.00 |
| Import Price Index | — | — | — | 5.3 | 5.3 | +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 65 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 65 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 1.12 vs 1.06 naive, n=65); Core CPI (RMSE 0.67 vs 1.10 naive, +39% improvement, n=65); Export Price Inflation (RMSE 7.27 vs 7.77 naive, +6% improvement, n=56); Import Price Inflation (RMSE 2.99 vs 2.05 naive, n=56).
Updated: 2026-03-27 by Alexander Dentler
Key Takeaways
The latest update on the SHF House Price Index reveals that house price inflation reached 8.92% YoY as of October 1, 2025, reflecting a continuing trend of rising prices over the past three quarters. This inflation rate stands above the historical average, which has ranged from 2.0% to 11.7%, positioning it in the 80th percentile since 2006. Notably, house price inflation exceeds both headline CPI at 4.02% and housing CPI at 3.44%, highlighting a significant premium of 4.90 percentage points over the former and 5.49 percentage points over the latter. This divergence suggests a robust demand in the housing market that may not be fully captured by broader inflation metrics, although the recent DFM nowcast hints at potential downward pressure.
The Dynamic Factor Model (DFM) nowcast indicates a contrasting picture, with a current estimate of 7.72% YoY as of February 1, 2026, trailing the observed inflation by 1.20 percentage points. This divergence implies that auxiliary indicators, particularly mortgage lending trends and housing CPI components, are exerting downward pressure on the underlying trend. The model suggests that while house prices have been rising, there may be emerging signs of mean reversion, prompting a cautious stance on future price increases. Policymakers and market participants should consider this nuanced interplay when assessing the housing market's outlook.
DFM Nowcast Comparison
| Observed | Nowcast | Prev. Nowcast | Gap | Revision | |
|---|---|---|---|---|---|
| SHF House Price Inflation (YoY) | 8.92% | 7.72% | 7.72% | -1.20 | +0.00 |
Observed: 2025-Q4. Nowcast: 2026-02. Previous nowcast: 2026-02. "Gap" = nowcast − observed. "Revision" = change in nowcast since previous run.
The SHF House Price Index is published quarterly by Sociedad Hipotecaria Federal, Mexico's federal mortgage development bank, typically around 40 days after the reference quarter ends. It is constructed from mortgage appraisal data (avalúos) using a Case-Shiller repeat-sales methodology, with breakdowns by state, new vs. used housing, and market segment (affordable vs. mid-to-high-end). Because the index reflects prices at the point of mortgage origination, it captures credit-driven demand rather than asking prices, making it a tighter gauge of actual transaction values and collateral quality across the housing market.
A Dynamic Factor Model (DFM) filters the quarterly SHF House Price Index using five Banxico auxiliary series — the funding rate, mortgage lending volumes, a housing purchase survey indicator, the SPF unemployment forecast, and construction activity — plus two CPI components (headline and housing subcategory). The model extracts a common factor from these seven indicators, producing a smoothed nowcast that updates between quarterly SHF releases whenever auxiliary data arrive. This filtered estimate helps distinguish persistent trends from quarterly noise in the observed house price series.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. House Price Nowcast (RMSE 1.32 vs 0.66 naive, n=12).
Updated: 2026-04-16 by Pablo Rivas
Key Takeaways
Brent oil prices have surged to $99.41 as of March 2026, reflecting a 38.6% increase year-on-year. With Brent oil data updated to March 2026, prices now sit at $99.41, showing a notable 38.6% rise compared to last year. The momentum is clearly upward, with a monthly increase of 43.2%. This surge in oil prices is particularly relevant for Mexico, where oil is a significant export, impacting federal revenue and regional economies.
Copper prices reached $12,528.71 in March 2026, demonstrating a robust 28.7% increase from the previous year but facing recent downward pressure. Copper, as of March 2026, stands at $12,528.71, up 28.7% year-on-year. However, it’s on a downward trend recently, with a monthly decline of 3.3%. This fluctuation is crucial for Mexico's mining sector, which is heavily reliant on copper production.
Corn prices are now at $213.30 as of March 2026, reflecting a modest annual increase of 2.7%, and maintaining a stable trend. Corn prices updated to March 2026 are at $213.30, showing a small year-on-year increase of 2.7%. The trend appears stable, with only a slight monthly rise of 1.3%. Given that Mexico is a net importer of corn, these price dynamics directly influence food prices and the costs of staples like tortillas.
Commodity prices feed directly into Mexico's inflation pulse and terms of trade. Oil and corn affect energy and food costs, while copper is a proxy for global industrial demand. For policymakers, sharp commodity swings can shift inflation expectations and fiscal balances, making these prices critical to monitor.
Updated: 2026-04-17 by Pablo Rivas
Key Takeaways
The February 2026 IMSS release shows unit labor costs at 3.66%, reflecting rising pressures as wages outpace productivity. Following February's formal sector wage data, ULC in manufacturing is rising, indicating that wages are growing faster than productivity. This latest reading is notable as it sits in the 80th percentile, having increased by 1.23 since the previous month. The implications are significant: this trend may signal potential cost-push inflation pressures that could squeeze margins and challenge competitiveness in the sector.
Real wages in the formal sector are on the upswing, enhancing purchasing power for households. Manufacturing real wages have gained traction, now at 4.48%, with a monthly increase of 1.77. This growth means workers are seeing an improvement in their purchasing power, a welcome relief in today’s economic landscape. Overall, the positive trajectory of real wages not only benefits households but also supports domestic consumption.
Across sectors, manufacturing and retail diverge sharply in wage dynamics, with manufacturing leading the charge. While manufacturing is thriving with robust real wage growth, retail is lagging behind, with current real wages at 4.09%. This divergence underscores the challenges facing the retail sector, which is grappling with stagnant wage growth, affecting its overall performance. The contrasting trajectories highlight the uneven recovery across the economy, with manufacturing benefiting more from the current labor dynamics.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 3.1 | 3.1 | +0.00 |
| ULC Retail | — | — | — | 2.6 | 2.6 | +0.00 |
| Real Wage Mfg | — | — | — | 4.3 | 4.3 | +0.00 |
| Real Wage Retail | — | — | — | 4.1 | 4.1 | +0.00 |
All values in % (MoM, seasonally adjusted). "Error" = actual − previous forecast. "Revision" = change in 12-month outlook. "—" = no prior forecast available.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Twelve-month-ahead forecasts for unit labor costs and real wages in manufacturing and retail are produced using a Seasonal Autoregressive Integrated Moving Average with eXogenous inputs (SARIMAX) model. The model is estimated on seasonally adjusted month-over-month percentage changes, with all four series — ULC manufacturing, ULC retail, real wage manufacturing, and real wage retail — entering as joint endogenous variables. No external auxiliary data feed the forecast; the model relies solely on the internal dynamics and cross-series interactions of the wage and productivity data. Forecast confidence intervals widen over the projection horizon.
Out-of-sample backtest over 24 evaluation windows using the SARIMAX. Out-of-sample backtest over 24 evaluation windows using the SARIMAX. RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. ULC Manufacturing (RMSE 2.97 vs 3.21 naive, +7% improvement, n=24); ULC Retail (RMSE 5.33 vs 5.22 naive, n=23); Real Wage Manufacturing (RMSE 2.20 vs 2.62 naive, +16% improvement, n=24); Real Wage Retail (RMSE 3.05 vs 2.97 naive, n=23).
Updated: 2026-03-21 by María López
Key Takeaways
Following the latest quarterly GDP release from INEGI, real GDP growth in Mexico has surged to an impressive 8.81%, reflecting a significant increase of 6.51 percentage points from previous estimates. The nowcast estimate, updated with the latest data, shows that real GDP growth has leapt to 8.81% for Q4 2025, marking a notable change of +6.51pp from previous projections. This explosive growth rate highlights the dynamic recovery occurring within the economy, setting a positive tone for future economic discussions and policy deliberations.
Private consumption continues to play a pivotal role in this economic momentum, reaching a staggering growth rate of 10.48%. Household spending is clearly supporting overall activity, significantly outpacing GDP growth. This surge in private consumption signals strong domestic demand, which is essential for sustaining the recovery and potentially alleviating some of the pressures from external factors.
Exports, however, tell a different story, with growth currently at -1.01%, reflecting a substantial decline of 6.22 percentage points. This downturn in export activity indicates weakening external demand, a concerning signal for an economy that heavily relies on trade, especially with key partners. It raises alarms about competitiveness and the potential impact on sectors tied to global markets, which could dampen growth if the trend continues.
On the flip side, imports are showing a robust growth rate of 7.47%, up by 2.10 percentage points from previous estimates. Domestic absorption is clearly on the rise, suggesting that businesses and consumers are optimistic and willing to invest in goods from abroad. This trend can bolster local economic activity, despite the underlying challenges posed by sluggish export performance.
DFM GDP Nowcasts
| Component | Last Obs. (Q4 2025) | Nowcast (Q4 2025) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 9.60% | 8.81% | 8.81% | +0.00 |
| Private Consumption | 5.88% | 10.48% | 10.48% | +0.00 |
| Imports | 28.72% | 7.47% | 7.47% | +0.00 |
| Exports | -1.01% | -1.01% | -1.01% | +0.00 |
QoQ annualized, seasonally adjusted. Nowcast = DFM filtered estimate using higher-frequency inputs. "Revision" = change from previous run.
Real activity data tracks the economy's engine — output, spending, and trade — while nowcasts bridge the lag between releases. Real GDP captures total production; private consumption reflects household demand; exports and imports reveal external demand and the flow of inputs for Mexico's trade-exposed, manufacturing-heavy economy. Shifts in U.S. demand, global prices, and the peso often show up first in trade, then filter into GDP and consumption. Because official series arrive with delays and revisions, model-based nowcasts provide an early, probabilistic read for policy timing — useful if treated with uncertainty bands and cross-checked against higher-frequency signals.
A Dynamic Factor Model (DFM) nowcasts quarterly GDP and its demand components — private consumption, imports, and exports — using 14 higher-frequency inputs. These include monthly employment indicators, industrial production (IGAE), consumer confidence, capacity utilization, retail sales, and private consumption, plus quarterly GDP sector breakdowns. The model extracts common factors via the Kalman filter, updating the nowcast each time any input series receives new data. Nowcast estimates are conditional expectations that narrow as more data arrive within each quarter.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Real GDP (RMSE 3.90 vs 3.82 naive, n=12); Private Consumption (RMSE 5.41 vs 2.51 naive, n=12); Exports (RMSE 22.26 vs 18.28 naive, n=12); Imports (RMSE 11.34 vs 17.09 naive, +34% improvement, n=12).
Updated: 2026-04-17 by Pablo Rivas
Key Takeaways
The latest ENOE survey shows unemployment at 3.31%, reflecting a positive downward trend as the labor market continues to stabilize. The 2025-10 ENOE survey reveals unemployment at 3.31%, around the 2nd percentile, down by 0.131% from the previous month. This marks a significant improvement as it has been 36 months since the rate last exceeded current levels. The underemployment rate also followed suit, currently at 12.2% and showing a similar downward trajectory, down 0.121% month-over-month. This consistent decline in both metrics signals a potential recovery in the labor market, albeit from historically low levels.
By gender, male and female unemployment rates show notable divergence, with men experiencing a slight uptick. Male unemployment stands at 3.51%, rising by 0.162% from the previous month, while female unemployment is at 3.62%, up by 0.0803%. This divergence suggests that men are facing greater challenges in the current labor market, potentially driven by sector-specific dynamics that could warrant further investigation. Both rates, however, remain near historically high levels, underscoring the ongoing pressures in the job market.
The share of informal workers remains alarmingly high, indicating persistent challenges in the formal labor sector. Informal employment is currently at 55.9%, a notable increase of 0.353% from the prior month, and it continues to hover around the 98th percentile historically. This rising trend in informality highlights structural deficiencies in the labor market, suggesting that while some progress is being made in reducing unemployment, many workers are still trapped in precarious positions without the benefits of formal employment. Such dynamics could have significant implications for economic stability and growth moving forward.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q4 2025) | Nowcast (Q4 2025) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.55% | 3.31% | — | — |
| Underemployment Rate | 10.42% | 12.20% | — | — |
| Male Unemployment | 2.50% | 3.51% | — | — |
| Female Unemployment | 2.61% | 3.62% | — | — |
Observed = latest quarterly ENOE value. Nowcast = DFM filtered estimate using monthly auxiliary data. "Revision" = change from previous run.
Labor slack and its composition shape inflation pressure, policy timing, and social risk. Unemployment, underemployment, and unemployment by gender reveal how broad and uneven slack is. In Mexico's large informal sector, the informal employment share can swing sharply — often contracting faster in downturns as unprotected jobs are cut first, then rebounding early — masking true slack if headline unemployment alone is tracked. Tracking these dimensions helps distinguish cyclical slack from structural mismatches and calibrate monetary policy accordingly.
Between quarterly ENOE survey releases, a Dynamic Factor Model (DFM) nowcasts employment indicators using higher-frequency auxiliary data. The model ingests monthly series — industrial production, consumer confidence, capacity utilization, retail sales, and private consumption — alongside quarterly GDP components to extract common factors that track the business cycle. When any auxiliary series receives new data, the Kalman filter updates the nowcast, providing an early signal before the next official employment release.
Out-of-sample backtest over 18 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 18 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Unemployment (RMSE 0.54 vs 0.13 naive, n=15); Underemployment (RMSE 1.26 vs 0.50 naive, n=11); Male Unemployment (RMSE 0.44 vs 0.26 naive, n=11); Female Unemployment (RMSE 0.44 vs 0.28 naive, n=11).
Updated: 2026-04-14 by Pablo Rivas
Key Takeaways
INEGI's Q1 2026 productivity release shows secondary sector output at 101, reflecting a modest rise but still indicating underlying volatility. The latest INEGI productivity data for Q1 2026, released in April, reveals secondary sector output at 101, a 0.398% increase from the previous month. This growth is driven primarily by the construction sector, which remains robust, while mining and energy continue to lag behind. Notably, the rise in productivity isn't broad-based; it’s concentrated in construction, underscoring the sector's critical role in the overall performance of the secondary sector.
Manufacturing composites show a concerning divergence in trends, signaling potential sustainability issues. Across the PCA indices, productivity has dipped slightly, falling by -0.223%, while sales have shown resilience with a modest increase of 0.028%. However, labor demand remains weak, reflected in a decline of -0.171%, raising flags about the sustainability of current growth patterns. This divergence suggests that while sales may hold up, the underlying labor demand could signal trouble ahead if not addressed.
Within manufacturing, the top-performing subsectors are petroleum and coal products, while the computer and electronic equipment sector is struggling. The top-performing subsectors are petroleum and coal products, which surged by 4.28%, showcasing their significant weight in the aggregate. Conversely, computer and electronic equipment has been a laggard, with a notable decline of -17.8% over the past few months. This stark contrast highlights the dependency on a few key subsectors for overall manufacturing performance, raising concerns about resilience amid broader economic uncertainties.
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: 2026-04-08 by María López
The March 2026 consumer confidence survey shows the general index at 1.22, sitting in the 88th percentile but down from last month. INEGI's latest March release reveals confidence at 1.22, which, while still elevated in the 88th percentile, has slipped by 0.07% from the previous month. This decline underscores a growing unease among consumers as they navigate turbulent economic waters. Notably, the housing-specific index has shown resilience, inching up to 0.83, suggesting that buyers are still optimistic about real estate despite the broader decline in consumer confidence. This sector's strength contrasts sharply with the durable goods index, which has taken a significant hit, falling by 0.67% and reflecting a more pessimistic outlook on spending in that category.
PCA Confidence Indices
| Index | Feb 2026 | Mar 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.28 | 1.22 | -0.07 |
| Housing Appetite | 0.75 | 0.83 | +0.08 |
| Durables Appetite | 1.50 | 0.83 | -0.67 |
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: 2026-04-02 by Ignacio Crane
Key Takeaways
The March 2026 SPF survey reveals a modest increase in the Aggregate Concern Index, signaling heightened economic unease. The March 2026 SPF survey shows the aggregate Concern Index at 2.82, placing it in the 64th percentile historically. This marks a stable month-over-month change, reflecting a nuanced sentiment among forecasters. The index's slight rise of 0.0032 indicates a growing awareness of underlying economic challenges, despite overall stability in the immediate outlook.
Economists have identified public insecurity and trade policy as significant growth constraints, underscoring systemic vulnerabilities. The key constraints currently cited include public insecurity at 9.7%, U.S. trade policy at 6.6%, and a lack of structural change at 5.0%. Notably, public insecurity has experienced the largest month-over-month decline, suggesting that while the issue remains pressing, there may be a slight easing in sentiment. This dynamic highlights the ongoing interplay between socio-political factors and economic performance.
The perceived probability of recession remains elevated, reflecting a cautious outlook among economists. The perceived probability of recession stands at 35.0%, placing it in the 89th percentile compared to historical norms. This elevated assessment relative to past data indicates significant concern regarding economic stability. Looking ahead, the probability for the next quarter is projected at 22.0%, suggesting a moderate outlook but still indicative of underlying risks.
FX expectations suggest a consistent undervaluation of the peso, aligning with forecasters' beliefs about its strength. According to forecasters, the current month's misalignment indicates that the peso is perceived as undervalued by 0.069. This sentiment has persisted across near-term horizons, reflecting a broader expectation of a stronger peso than previously anticipated. Such perceptions may influence investment decisions and currency strategies in the coming months.
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: 2026-04-17 by Pablo Rivas
Key Takeaways
Mexican equity markets as of April 17, 2026, show excess returns at 0.2107, with realized volatility registering at 0.0093. With market data through April 17, 2026, excess returns are sitting at 0.2107, reflecting a robust sentiment shift as markets respond to ongoing geopolitical tensions and economic policy uncertainty. Realized volatility is pegged at 0.0093, indicating a moderate level of market fluctuations. The recent revisions also emphasize a more cautious atmosphere, with a jump in excess returns signaling that investors are grappling with new risks in the landscape. While illiquidity remained steady, the rising excess returns suggest that traders are preparing for potential shocks.
The decomposition shows that recent volatility has been primarily driven by US policy shocks and liquidity concerns, with uncertainty playing a significant role. Recent volatility has been driven by significant contributions from US policy shocks and liquidity, with persistent uncertainty hanging over the markets like a cloud. These elements have created a volatile mix, as traders are increasingly reactive to shifts in the macroeconomic environment. The interplay of these factors suggests that as long as uncertainties linger, we can expect pronounced market movements and a jittery investor sentiment.
Investor sentiment, as gauged by various indicators, reflects growing alarm in the current environment. Investor sentiment is showing signs of distress, as levels of policy uncertainty continue to climb amid ongoing discussions about public security challenges. The increase in alarm signals a market that is grappling with both economic and social concerns, underscoring the complex landscape policymakers face. As these issues intertwine, maintaining investor confidence will be crucial for navigating the upcoming economic waters.
Volatility Measures
| Measure | Mar 2026 | Apr 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.2169 | 0.0444 | +0.2613 | US Policy Shocks (+0.153) |
| Realized Volatility | 0.0122 | 0.0098 | -0.0024 | Investor Sentiment (-0.001) |
| Illiquidity (Amihud) | 147.1455 | 119.4348 | -27.7107 | Investor Sentiment (-19.446) |
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: 2026-04-17 by Pablo Rivas
Key Takeaways
Banxico's April 2026 credit release shows money market spreads tightening as funding and TIIE rates hold steady. Following the latest April lending data, rate premia have narrowed, with the spread currently at 0.182%, reflecting a tightening trend as it shrank by 0.106% from the previous month. This shift is notable given that the spread has been on a three-month downward streak, decreasing a total of 0.237% over that time. The tightening indicates a more favorable funding environment for the non-financial private sector, but the backdrop of geopolitical tensions and inflationary risks means caution is still the name of the game.
Household mortgage rates remain elevated, reflecting ongoing affordability concerns for borrowers. The total annual cost of mortgages, or CAT, averages 13.9%, with a range from 10.7% to 28.2%. While this stability suggests some pass-through from the policy rate, the elevated levels indicate that affordability remains a pressing issue for households, potentially dampening demand in the housing sector. As Banxico navigates its next policy move, this dynamic will be critical to watch.
Debt issuance patterns show a preference for fixed-rate financing, signaling a shift in corporate funding strategies. In the current landscape, fixed-rate debt constitutes 18.74% of corporate financing, while variable rates account for 19.92%. This inclination towards fixed rates suggests that firms are prioritizing stability amid uncertainty, opting to shield themselves from potential interest rate hikes. As the economic environment evolves, this strategic pivot could have significant implications for future capital flows.
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.
