Stay informed with the latest insights on Mexico's economy via statistics, AI analysis, and synthesis.
Today's Lead:
Inflation — CPI: data revised higher
Monetary Policy — Market Expectations: new observations
Financing — Nonfinancial Lending: data revised lower
Financing — Volatility: data revised lower
Updated: 2026-07-09
Wall Street experienced losses following the conclusion of the ceasefire with Iran. The market reacted negatively to the geopolitical developments, impacting investor sentiment. Analysts noted that the end of the truce could lead to increased volatility in the region and affect global markets. — El Financiero, 08 Jul 2026. Read more
The Mexican peso has fallen for the second consecutive day against the dollar due to rising nervousness surrounding developments in the Middle East. Market participants are reacting to geopolitical uncertainties, which have influenced currency trading dynamics. — El Economista, 08 Jul 2026. Read more
Minutes from the June meeting of the Federal Reserve revealed that officials showed heightened concern regarding inflation. The discussions highlighted the need for vigilance in monitoring inflationary pressures, indicating a shift in focus among Fed members. This reflects ongoing challenges in managing economic stability. — El Economista, 08 Jul 2026. Read more
The Mexican peso has depreciated due to the strengthening of the dollar, following comments made by President Trump regarding Iran. The remarks have influenced market sentiment, contributing to the peso's decline against the dollar. This development highlights the ongoing volatility in currency markets linked to geopolitical events. — El Economista, 08 Jul 2026. Read more
The Mexican Ministry of Finance announced that the country's GDP is projected to perform better than previously estimated by the International Monetary Fund (IMF). This positive outlook reflects the government's confidence in the national economy's resilience and growth potential. — El Economista, 08 Jul 2026. Read more
The dollar has gained strength following the breakdown of the US-Iran peace agreement, leading to a depreciation of the Mexican peso. Analysts are closely monitoring the implications of this geopolitical shift on the Mexican economy and currency stability. — El Financiero, 08 Jul 2026. Read more
Cybercriminal groups have emerged as the primary threat to financial institutions in the first half of the year, according to a report. The article highlights the increasing sophistication of these groups and the need for enhanced security measures within the financial sector to combat this growing risk. — El Economista, 08 Jul 2026. Read more
The article discusses the significance of record car sales in Mexico, highlighting factors such as consumer demand and economic conditions. It notes that the automotive industry is a crucial sector for the country's economy, contributing to job creation and investment. The article emphasizes the importance of understanding these sales figures in the context of broader economic trends. — El Financiero, 06 Jul 2026. Read more
Mexican stock markets experienced a decline during a trading session characterized by low trading volume. Analysts noted that the lack of significant market activity contributed to the downward trend. The overall sentiment in the markets reflected cautious investor behavior amid ongoing economic uncertainties. — El Economista, 06 Jul 2026. Read more
The Mexican peso experienced a slight appreciation against the US dollar during a day characterized by reduced trading activity. The movement in the exchange rate reflects ongoing market dynamics, although specific figures were not disclosed in the article. — El Economista, 03 Jul 2026. Read more
The US, Canada and Mexico begin bumpy negotiations to renew North American trade pact — Google News, 08 Jul 2026. Read more
Mexico strengthens trade diversification with EU approval — Google News, 08 Jul 2026. Read more
Claudia Sheinbaum Hopes USMCA Will Be Extended for 16 Years — Google News, 08 Jul 2026. Read more
Europe and Mexico relaunch a trade partnership key to our strategic autonomy — Google News, 08 Jul 2026. Read more
Mexico Breeds Sterile Flies to Save Cattle Trade and Trust — Google News, 08 Jul 2026. Read more
Trade Mexico-USA reaches US$839 billion — Google News, 08 Jul 2026. Read more
Currency Strength Undercuts Mexico's Import Duties on China — Google News, 08 Jul 2026. Read more
Farm-friendly EU-Mexico trade deal clears Parliament — Google News, 08 Jul 2026. Read more
Mexico rejoins global top 10 for foreign investment — Google News, 08 Jul 2026. Read more
Mexico-U.S. Goods Trade Hits Record Before T-MEC Talks — Google News, 07 Jul 2026. Read more
Updated: 2026-06-27 by María López
Key Takeaways
Following the May 7, 2026 decision, Banxico's policy rate stands at 6.50%. After Banxico's May 7 meeting, the target rate remains at 6.50%, following a recent cut of 0.25%. The current policy stance has held steady since then, as the committee grapples with easing headline inflation but remains wary of global inflationary pressures and local economic uncertainties. This marks a pivotal moment in their strategy, as they weigh the need for stimulus against potential inflationary threats and structural weaknesses in the economy.
Relative to the United States, the Fed's target rate now sits at 3.62%, creating a significant rate differential of 2.88%. The Fed's target rate currently stands at 3.62%, reflecting a cautious stance similar to Banxico’s. With a rate differential of 2.88%, this gap creates implications for capital flows, as investors weigh potential returns against risks in both economies. Banxico’s decisions are increasingly influenced by the need to maintain economic stability amid domestic pressures, while the Fed continues its own trajectory of monetary policy adjustments.
The rate differential creates a complex landscape for capital flows and foreign exchange pressures.
The central bank's policy rate is the primary tool for steering inflation and economic activity. Banxico targets 3% annual inflation and adjusts its overnight interbank rate to influence borrowing costs throughout the economy. The rate differential with the United States affects capital flows and exchange rate dynamics — a wider spread can attract foreign investment but may constrain domestic credit. Policy decisions are announced roughly every six weeks following scheduled monetary policy meetings.
Updated: 2026-07-05 by María López
Key Takeaways
Banxico's minutes from the May 7 meeting show a neutral tone (composite score +0.0). Banxico's minutes from the May 7 meeting show a neutral tone (composite score +0.0). The committee's decision: The policy decision was to hold the interest rate steady.. Vote split: 5 hold.
The committee remains cautious, prepared to adjust policy if necessary, depending on geopolitical developments and their impact on inflation and growth. Forward guidance: The committee remains cautious, prepared to adjust policy if necessary, depending on geopolitical developments and their impact on inflation and growth. Hawkish signals: Global inflation has increased due to energy prices.; Geopolitical tensions could lead to persistent inflationary pressures.. Dovish signals: Medium- and long-term inflation expectations remain anchored.; Labor markets show signs of cooling, reducing inflationary pressures..
The tone is more hawkish compared with the prior 3 meetings. The tone is more hawkish compared with the prior 3 meetings. The latest composite score of +0.0 compares with a -0.5 average over the previous 3 meetings. The vote was unanimous, with no recorded dissent.
Each Banxico monetary policy meeting's published minutes are analyzed by a large language model, which scores the committee's overall tone on a composite scale from -2 (very dovish) to +2 (very hawkish) and extracts the vote split, forward guidance, and hawkish/dovish signals. Minutes are typically published by Banxico about two weeks after the corresponding policy decision, so this analysis always lags the live decision by that margin. The commentary on this page is assembled directly from those stored, structured fields rather than generated by a separate LLM call.
Updated: 2026-07-09 by Ignacio Crane
Key Takeaways
With new insights from the Banxico Survey of Professional Forecasters and recent market movements, our model-based expectations reflect a significant shift in sentiment. The model points toward likely inaction at the upcoming policy decision on August 6, with a substantial chance of no action reflected in a high hold probability of about 58%. This suggests that, while the mean expected change has swung slightly toward a modest cut, the modal bucket now rests at ±0bp, with a notable secondary probability of a -25bp cut at approximately 39%. Such a distribution underscores the cautious approach likely to be adopted by policymakers in the face of prevailing uncertainties.
Recent data updates reveal critical shifts in key economic indicators. Inflationary trends show easing, while economic policy uncertainty remains pronounced, suggesting that the data landscape remains primarily stable since our last update. These observations are crucial as they inform the committee's deliberations and contextualize market expectations.
The interplay of various economic drivers continues to shape the trajectory of monetary policy decisions. Moderate dovish pressures emerge from the easing inflation rates, while significant concerns regarding public security and economic policy uncertainty cast a shadow over the decision-making landscape. While inflation appears to be stabilizing, the growing unease surrounding governance and security could exert a negative influence on investor confidence and economic growth. Notably, the policy-uncertainty proxy looms large as a determinant, reminding observers that the ultimate decision will rest upon the committee's judgment, rather than merely on model outputs.
Ordered Probit Probabilities
| Rate Change | 04 Feb | 05 Feb 2026 | Δ |
|---|---|---|---|
| Cut | 58.4% | 42.0% | -16.4 |
| Hold | 41.6% | 58.0% | +16.4 |
| Hike | 0.0% | 0.0% | +0.0 |
| E[Δrate] | -17.5 bp | -11.3 bp | +6.2 bp |
Probabilities in %. Modal bin in bold. E[Δrate] = probability-weighted expected change in basis points.
When markets and the public can anticipate how and why the central bank acts, uncertainty falls and policy becomes more effective. Clear communication helps businesses plan investments, households make borrowing decisions, and international investors gauge currency risks. Economists often stress the importance of clarity and traceability — the ability to follow and understand decisions step by step. Without it, rate moves risk being misread, causing volatility instead of stability. With it, policy signals are more credible, anchoring expectations and strengthening the central bank's influence.
Rate-change probabilities are estimated using an ordered probit model with eight macroeconomic and financial drivers: consumer price inflation (CPI), consumer confidence, the 30-day peso/dollar change, the CETES 28-day spread, stock market growth, the yield curve slope (10Y minus 2Y), Mexico's Economic Policy Uncertainty index, and the Fed-Banxico rate differential. The model maps these drivers into probability bins for the next monetary policy decision, ranging from cuts of 50 basis points or more to hikes of the same magnitude. Coefficients are estimated on the historical record of Banxico decisions and their pre-decision data environment. Probabilities update daily as driver series refresh and should be treated as one input among many.
Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Lower Brier scores indicate better-calibrated probability forecasts.
Updated: 2026-07-06 by María López
Key Takeaways
The DOF carried 13 economically relevant publications in the week ending July 06, 2026. The DOF carried 13 economically relevant publications in the week ending July 06, 2026. By category: financial_regulation (7), tax (5), trade (3), energy (1). The weekly maximum severity reached 3/5.
Recent notable publications include:. July 06 — SECRETARIA DE HACIENDA Y CREDITO PUBLICO: Resolución que modifica las Disposiciones de carácter general aplicables a las casas de bolsa. (severity 3/5). July 03 — SECRETARIA DE HACIENDA Y CREDITO PUBLICO: Oficio 500-05-00-00-00-2026-16022 mediante el cual se comunica listado de contribuyentes que promovieron algún medio de defensa en contra d… (severity 3/5). July 03 — SECRETARIA DE HACIENDA Y CREDITO PUBLICO: Acuerdo por el cual se dan a conocer los montos de los estímulos fiscales aplicables a la enajenación de gasolinas en la región fronteriza… (severity 3/5).
CONAMER (the Comisión Nacional de Mejora Regulatoria), which previously required draft regulations to be pre-published for public consultation before taking effect, was extinguished by a reform enacted in June 2025. With that pre-publication consultation step gone, the Diario Oficial de la Federación is now the earliest official signal available for new regulations, decrees, and reforms — there is no longer an upstream draft-stage checkpoint to monitor instead.
This monitor scans the DOF's daily sumario (official gazette summary) for publication titles and issuing organisms, then applies a keyword classifier — not an LLM — to flag economically relevant entries across six categories (tax, trade, labor, energy, financial regulation, judicial) and assign a severity score from 1 (routine) to 5 (major fiscal/labor policy change, e.g. Miscelánea Fiscal or a minimum-wage decree). Only sumario titles and issuing organisms are scanned in this MVP; full document text is not retrieved or analyzed.
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: 2026-07-09 by Ignacio Crane
Key Takeaways
The early-July 2026 CPI release shows headline inflation at 3.58%, reflecting a decrease of 0.10% from the previous month and firmly within Banxico's 2%-4% target band. The early-July 2026 CPI release shows headline inflation at 3.58%, reflecting a decrease of 0.10% from the previous month and firmly within Banxico's 2%-4% target band. This decline underscores a 20-month stretch in which inflation has not exceeded current levels, indicating a sustained trend of easing price pressures. The reduction from previous levels, particularly in the context of a 6-month downward trajectory, suggests that the overall cost of living for households is stabilizing, which may influence Banxico's forthcoming monetary policy decisions.
Core inflation, which excludes volatile food and energy prices, stands at 4.21%, indicating a divergence from headline inflation trends. Core inflation, which excludes volatile components, stands at 4.21%, slightly declining by 0.01% from last month. This rate, while showing a modest decrease, remains above the target, suggesting that underlying inflationary pressures persist despite easing headline figures. The divergence between core inflation and the headline rate raises concerns for policymakers, as it signals that while general price pressures may be receding, the more stable components of inflation are still elevated, complicating the path to achieving the desired target.
Trade prices reflect significant upward trends, particularly in export prices, which may influence future inflation dynamics. Trade prices, particularly export price indices, have surged to an impressive 15.90%, marking a substantial increase that underscores the robust demand for Mexican goods in global markets. This upward momentum, coupled with rising import prices at 5.46%, suggests that while domestic inflation may be moderating, external factors are imposing upward pressure on trade-related costs. Such dynamics could lead to a complex interplay in inflation forecasts, as the central bank must navigate these external pressures while addressing domestic economic uncertainties.
| 1H Jun 2026 | 1H Jun 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 3.6 | — | — | 5.0 | 5.0 | +0.00 |
| Core CPI | 4.2 | — | — | 4.6 | 4.6 | +0.00 |
| Export Price Index | — | — | — | 7.2 | 7.2 | +0.00 |
| Import Price Index | — | — | — | 6.7 | 6.7 | +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 70 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 70 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 1.08 vs 1.03 naive, n=70); Core CPI (RMSE 0.65 vs 1.06 naive, +39% improvement, n=70); Export Price Inflation (RMSE 7.27 vs 7.77 naive, +6% improvement, n=56); Import Price Inflation (RMSE 2.99 vs 2.05 naive, n=56).
Updated: 2026-06-26 by Alexander Dentler
Key Takeaways
The recent update from the SHF House Price Index reveals significant insights into the state of the housing market, particularly with the new observation of 8.71% YoY inflation as of 2026-01-01. This level of house price inflation exceeds historical averages, positioning itself in the 75th percentile since 2006. In comparison, headline CPI inflation stands at 3.94% while housing CPI inflation is at 3.61%, suggesting that house prices are rising notably faster than general inflation metrics. This divergence reflects the ongoing demand pressures in the housing sector, despite a slight decline of 0.21 percentage points from the previous quarter.
The DFM nowcast provides valuable context, estimating house price inflation at 8.65% YoY as of 2026-05-01. This nowcast aligns closely with the latest observed value, indicating that auxiliary indicators such as mortgage lending and housing CPI are confirming the current trajectory rather than suggesting any significant upward or downward pressure. The model's consistency with observed data suggests that the dynamics within the housing market remain robust and supportive of sustained inflationary trends.
DFM Nowcast Comparison
| Observed | Nowcast | Prev. Nowcast | Gap | Revision | |
|---|---|---|---|---|---|
| SHF House Price Inflation (YoY) | 8.71% | 8.65% | 8.65% | -0.06 | +0.00 |
Observed: 2026-Q1. Nowcast: 2026-05. Previous nowcast: 2026-05. "Gap" = nowcast − observed. "Revision" = change in nowcast since previous run.
The SHF House Price Index is published quarterly by Sociedad Hipotecaria Federal, Mexico's federal mortgage development bank, typically around 40 days after the reference quarter ends. It is constructed from mortgage appraisal data (avalúos) using a Case-Shiller repeat-sales methodology, with breakdowns by state, new vs. used housing, and market segment (affordable vs. mid-to-high-end). Because the index reflects prices at the point of mortgage origination, it captures credit-driven demand rather than asking prices, making it a tighter gauge of actual transaction values and collateral quality across the housing market.
A Dynamic Factor Model (DFM) filters the quarterly SHF House Price Index using five Banxico auxiliary series — the funding rate, mortgage lending volumes, a housing purchase survey indicator, the SPF unemployment forecast, and construction activity — plus two CPI components (headline and housing subcategory). The model extracts a common factor from these seven indicators, producing a smoothed nowcast that updates between quarterly SHF releases whenever auxiliary data arrive. This filtered estimate helps distinguish persistent trends from quarterly noise in the observed house price series.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. House Price Nowcast (RMSE 1.32 vs 0.66 naive, n=12).
Updated: 2026-06-06 by María López
Key Takeaways
Brent oil prices just jumped to $106.30 as of May 2026, reflecting a staggering YoY increase of 65.8%. Brent oil prices through May 2026 show a notable rise, landing at $106.30. This marks a significant YoY change of +65.8%, and the momentum is clearly up, with prices climbing in recent days. For Mexico, where oil is a major export and accounts for about 15% of federal revenue, these figures are crucial — they could bolster government finances and Pemex operations.
Copper prices are hitting $13,483.75, up 41.5% YoY as of May 2026. With copper data updated to May 2026, the current price stands at $13,483.75, showcasing a robust YoY increase of 41.5%. The trend remains upward, indicating strong demand in the global market. Given that Sonora dominates copper production in Mexico, this surge could enhance regional economic activity, despite the sector's small employment footprint.
Corn prices are at $215.62, reflecting a modest YoY increase of 5.3%. As of May 2026, corn prices reached $215.62, showing a slight YoY rise of 5.3%. The trend appears stable, neither soaring nor plummeting significantly. This is particularly relevant for Mexico, where corn is a staple for many, and price stability is key for the 1.5 million smallholder farmers dependent on this crop.
Commodity prices feed directly into Mexico's inflation pulse and terms of trade. Oil and corn affect energy and food costs, while copper is a proxy for global industrial demand. For policymakers, sharp commodity swings can shift inflation expectations and fiscal balances, making these prices critical to monitor.
Updated: 2026-06-24 by Ignacio Crane
Key Takeaways
The April 2026 IMSS release shows unit labor costs at 3.34%, indicating that wages are growing faster than productivity. Following April's formal sector wage data, ULC in manufacturing is rising, reflecting a modest deceleration in productivity gains. The growth rate increased by 0.47, positioning it in the 79th percentile historically. This suggests potential cost-push inflation pressures that could affect the competitiveness of the manufacturing sector moving forward.
Real wages in the formal sector rose to 4.49%, signifying an improvement in purchasing power for workers. This increase in real wages indicates positive gains for households, enhancing their ability to sustain consumption amid rising costs. While the overall trend is encouraging, it is essential to acknowledge that the year-over-year growth has diminished slightly by 1.7%, which could temper expectations for sustained gains.
Across sectors, a notable divergence emerges as retail outperforms manufacturing in real wage growth. Retail real wages have grown at a commendable 4.49%, contrasting sharply with manufacturing's 3.12%. This divergence underscores the contrasting dynamics within the labor market, where retail workers are benefitting more significantly from wage increases, while manufacturing remains constrained by rising labor costs.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 0.3 | 0.3 | +0.00 |
| ULC Retail | — | — | — | 1.4 | 1.4 | +0.00 |
| Real Wage Mfg | — | — | — | 3.0 | 3.0 | +0.00 |
| Real Wage Retail | — | — | — | 4.3 | 4.3 | +0.00 |
All values in % (MoM, seasonally adjusted). "Error" = actual − previous forecast. "Revision" = change in 12-month outlook. "—" = no prior forecast available.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Twelve-month-ahead forecasts for unit labor costs and real wages in manufacturing and retail are produced using a Seasonal Autoregressive Integrated Moving Average with eXogenous inputs (SARIMAX) model. The model is estimated on seasonally adjusted month-over-month percentage changes, with all four series — ULC manufacturing, ULC retail, real wage manufacturing, and real wage retail — entering as joint endogenous variables. No external auxiliary data feed the forecast; the model relies solely on the internal dynamics and cross-series interactions of the wage and productivity data. Forecast confidence intervals widen over the projection horizon.
Out-of-sample backtest over 24 evaluation windows using the SARIMAX. Out-of-sample backtest over 24 evaluation windows using the SARIMAX. RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. ULC Manufacturing (RMSE 2.97 vs 3.21 naive, +7% improvement, n=24); ULC Retail (RMSE 5.33 vs 5.22 naive, n=23); Real Wage Manufacturing (RMSE 2.20 vs 2.62 naive, +16% improvement, n=24); Real Wage Retail (RMSE 3.05 vs 2.97 naive, n=23).
Updated: 2026-06-19 by Pablo Rivas
Key Takeaways
Following the recent updates in key economic indicators, real GDP growth in Mexico is now estimated at 4.96%, reflecting a robust upward revision of 2.66%. The latest quarterly GDP release from INEGI shows a marked increase in growth expectations, signaling a healthier economic outlook. This adjustment highlights a strong recovery trajectory, likely driven by resilient domestic consumption and improved industrial performance. As we advance into Q1 2026, this optimistic figure may bolster confidence among investors and policymakers alike.
Private consumption continues to be a key driver of growth. Household spending is estimated to have soared to 8.09%, significantly outpacing GDP growth. This robust expansion suggests that consumers are confident and willing to spend, providing essential support to overall economic activity. Such vigor in private consumption is a positive sign, signaling a thriving domestic market that can help buffer against external shocks.
Exports are struggling to keep up with domestic demand. External demand remains tepid, with export growth now at a mere 0.58%. This lackluster performance raises concerns about Mexico's competitiveness in the global market, especially as trading partners navigate their own economic uncertainties. The soft export figures could hint at challenges ahead for sectors reliant on international trade, potentially dampening the overall growth outlook.
Imports are indicating a shift in domestic absorption patterns. Imports have contracted to 1.56%, reflecting a 3.81% decline from previous estimates. This downturn signals a potential cooling in domestic demand, as consumers and businesses may be becoming more cautious in their spending habits. The drop in imports could also suggest that the economy is adjusting to current market conditions, though it may raise questions about future growth sustainability.
Net trade dynamics appear to be shifting. The trade balance contribution remains a mixed bag, as the decline in imports coupled with stagnant export growth presents a complex scenario. While fewer imports can ease some pressure on the trade deficit, the sluggish export performance raises flags about Mexico's economic resilience in a challenging global landscape. Policymakers will need to monitor these trends closely to ensure balanced and sustainable growth.
DFM GDP Nowcasts
| Component | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 6.19% | 4.96% | 4.96% | +0.00 |
| Private Consumption | 0.15% | 8.09% | 8.09% | +0.00 |
| Imports | 25.37% | 1.56% | 1.56% | +0.00 |
| Exports | 0.58% | 0.58% | 0.58% | +0.00 |
QoQ annualized, seasonally adjusted. Nowcast = DFM filtered estimate using higher-frequency inputs. "Revision" = change from previous run.
Real activity data tracks the economy's engine — output, spending, and trade — while nowcasts bridge the lag between releases. Real GDP captures total production; private consumption reflects household demand; exports and imports reveal external demand and the flow of inputs for Mexico's trade-exposed, manufacturing-heavy economy. Shifts in U.S. demand, global prices, and the peso often show up first in trade, then filter into GDP and consumption. Because official series arrive with delays and revisions, model-based nowcasts provide an early, probabilistic read for policy timing — useful if treated with uncertainty bands and cross-checked against higher-frequency signals.
A Dynamic Factor Model (DFM) nowcasts quarterly GDP and its demand components — private consumption, imports, and exports — using 14 higher-frequency inputs. These include monthly employment indicators, industrial production (IGAE), consumer confidence, capacity utilization, retail sales, and private consumption, plus quarterly GDP sector breakdowns. The model extracts common factors via the Kalman filter, updating the nowcast each time any input series receives new data. Nowcast estimates are conditional expectations that narrow as more data arrive within each quarter.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Real GDP (RMSE 3.90 vs 3.82 naive, n=12); Private Consumption (RMSE 5.41 vs 2.51 naive, n=12); Exports (RMSE 22.26 vs 18.28 naive, n=12); Imports (RMSE 11.34 vs 17.09 naive, +34% improvement, n=12).
Updated: 2026-07-03 by Alexander Dentler
Key Takeaways
The latest ENOE survey for January 2026 reveals a notable resilience in the Mexican labor market as the unemployment rate remains at 2.51%, reflecting a low percentile historically. The January 2026 ENOE survey shows unemployment at 2.51%, which is around the 1st percentile of its historical range. This figure represents a decline of -0.0158% compared to December 2025, continuing a downward trend observed over the past year, where it has decreased by -0.22%. Such persistently low unemployment rates might suggest a tightening labor market, which could have implications for wage pressures and consumer spending.
By gender, the unemployment landscape presents a nuanced picture, with male unemployment at 3.35%, significantly higher than female unemployment at 3.51%. Male and female unemployment rates show a divergence, with males registering at 3.35%—around the 86th percentile—while females are at 3.51%, around the 14th percentile. This disparity highlights the ongoing challenges faced by male workers in securing employment relative to their female counterparts, suggesting potential sectoral or demographic influences at play.
The share of informal workers remains elevated, signaling persistent structural issues in the labor market. Informal employment in January 2026 stands at 55.7%, which is around the 96th percentile of its historical range. This marks an increase of 0.132% from the previous month, indicating a rising trend in informality. The prevalence of informal employment often points to underlying economic vulnerabilities and may complicate efforts to achieve sustainable growth and improve job quality.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q2 2026) | Nowcast (Q2 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.56% | 2.51% | — | — |
| Underemployment Rate | 10.28% | 12.17% | — | — |
| Male Unemployment | 2.45% | 3.35% | — | — |
| Female Unemployment | 2.71% | 3.51% | — | — |
Observed = latest quarterly ENOE value. Nowcast = DFM filtered estimate using monthly auxiliary data. "Revision" = change from previous run.
Labor slack and its composition shape inflation pressure, policy timing, and social risk. Unemployment, underemployment, and unemployment by gender reveal how broad and uneven slack is. In Mexico's large informal sector, the informal employment share can swing sharply — often contracting faster in downturns as unprotected jobs are cut first, then rebounding early — masking true slack if headline unemployment alone is tracked. Tracking these dimensions helps distinguish cyclical slack from structural mismatches and calibrate monetary policy accordingly.
Between quarterly ENOE survey releases, a Dynamic Factor Model (DFM) nowcasts employment indicators using higher-frequency auxiliary data. The model ingests monthly series — industrial production, consumer confidence, capacity utilization, retail sales, and private consumption — alongside quarterly GDP components to extract common factors that track the business cycle. When any auxiliary series receives new data, the Kalman filter updates the nowcast, providing an early signal before the next official employment release.
Out-of-sample backtest over 20 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 20 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Unemployment (RMSE 22.27 vs 0.13 naive, n=17); Underemployment (RMSE 1.26 vs 0.50 naive, n=11); Male Unemployment (RMSE 0.44 vs 0.26 naive, n=11); Female Unemployment (RMSE 0.44 vs 0.28 naive, n=11).
Updated: 2026-06-12 by María López
Key Takeaways
INEGI's Q2 2026 productivity release shows secondary sector output at 102, reflecting a solid 2.13% increase from the previous month. The latest INEGI productivity data for Q2 2026, released on June 12, reveals that secondary sector output is holding strong, driven by notable gains in construction and manufacturing. This growth is broad-based, with the construction sector leading the charge, signaling resilience against inflationary pressures. Meanwhile, mining lags behind, indicating potential instability in that subsector.
Manufacturing composites show a mixed bag of trends, highlighting sustainability concerns. Across the PCA indices, productivity dipped slightly while sales and inventory dynamics suggest a tightening labor market. The divergence in labor demand—currently at a low of -1.49—raises red flags about future growth potential, especially as rising inventory levels could indicate overproduction risks.
Within manufacturing, construction shines while the chemical industry struggles. The top-performing subsectors include construction, which is at the 99th percentile, showing a whopping 7.76% increase, while the chemical industry underperforms in the 21st percentile, down 7.74%. The robust construction output significantly bolsters the overall manufacturing index, but the decline in chemicals underscores the volatility and challenges facing specific industries.
PCA Composite Indices
| Index | May 2025 | Jun 2025 | Δ |
|---|---|---|---|
| Productivity Index | 0.50 | 0.28 | -0.22 |
| Sales Index | 0.58 | 0.61 | +0.03 |
| Inventory Index | 0.15 | -0.03 | -0.18 |
| Labor Demand Index | -1.32 | -1.49 | -0.17 |
Standardized scores (0 = mean, ±1 = one standard deviation).
Productivity trends reveal the economy's capacity to grow without stoking inflation. In Mexico, productivity in the secondary sector — mining, energy, construction, and especially manufacturing — signals how efficiently output expands relative to inputs. Strong productivity gains mean firms can meet demand without raising prices, easing inflation pressure and supporting sustainable wage growth. Weak productivity, by contrast, constrains supply, making cost shocks more inflationary. Manufacturing deserves closer scrutiny, as its diverse subsectors respond differently to global demand, exchange rate shifts, and investment cycles. Tracking these patterns helps judge whether growth is supported by efficiency gains or reliant on credit and labor cost increases.
Four composite indices — productivity, sales, inventory, and labor demand — are constructed using Principal Component Analysis (PCA) applied to INEGI manufacturing subsector data and GDP sector composition. PCA extracts the dominant co-movement pattern across subsectors, producing standardized indices that summarize broad trends while filtering out subsector-specific noise. The productivity index draws on output-per-worker measures across manufacturing branches; the sales, inventory, and labor demand indices use INEGI's corresponding survey-based indicators supplemented by GDP sector weights.
Updated: 2026-07-03 by Alexander Dentler
The June 2026 consumer confidence survey shows the general index at 1.12, reflecting elevated sentiment at the 85th percentile. INEGI's latest June 2026 release reveals confidence at 1.12, reflecting elevated sentiment at the 85th percentile. This index rose by 0.11 compared to May, indicating a positive shift in consumer attitudes. However, the durable goods index at 1.72 suggests particularly strong confidence in this area, contrasting with the housing-specific index, which has dropped to 0.10. This divergence may reflect consumers' prioritization of immediate purchases over long-term investments amid ongoing economic uncertainties.
PCA Confidence Indices
| Index | May 2026 | Jun 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.01 | 1.12 | +0.11 |
| Housing Appetite | 0.34 | 0.10 | -0.24 |
| Durables Appetite | 1.29 | 1.72 | +0.43 |
Values are z-scores (0 = historical mean, ±1 = one standard deviation).
The ENCO (Encuesta Nacional sobre Confianza del Consumidor) is conducted jointly by INEGI and Banco de México. Roughly 2,300 households across 32 major cities are interviewed during the first 20 days of each reference month, and results are published around the 5th of the following month. The survey uses a rotating panel design — each household stays in sample for four consecutive months, rests for eight, then returns for four more — which smooths out idiosyncratic response noise while capturing genuine shifts in sentiment. Because confidence data arrive before most hard activity indicators for the same month, they provide an early read on whether household demand is strengthening or cooling.
Three composite confidence indices — general sentiment, housing appetite, and durables appetite — are extracted from the eight raw INEGI survey questions using Principal Component Analysis (PCA). PCA identifies the common variation within each question group, producing a single index that captures the dominant signal while filtering out question-specific noise. The general index draws on six broad economic outlook questions; the housing and durables indices each isolate spending appetite in categories most sensitive to interest rates and household balance sheets.
Updated: 2026-07-04 · News-based EPU indices (complete months)
Key Takeaways
Overall uncertainty at a multi-month low. Mexico's news-based Economic Policy Uncertainty index fell to 19.3 in June 2026, its lowest reading in months and the fourth straight monthly decline from 21.9 in March (20.0 in April, 19.8 in May). The index measures the share of Mexican news coverage discussing economic-policy uncertainty, so the drift lower signals a calmer policy-news environment through the second quarter.
Sovereign-debt and currency concern is doing most of the cooling. The sovereign-debt/currency sub-index fell to 16.1 from 21.9 in March — the single largest contributor to the overall decline. Fiscal-policy uncertainty also eased to 7.1 (from 8.4 in March), and trade-policy uncertainty stayed subdued at 7.6. Monetary-policy uncertainty was the one sub-index to tick up in June, to 14.5 after bottoming at 13.2 in May, consistent with renewed attention on the rate path.
What to watch. These are complete-month figures; the current partial month is excluded until it closes. A sustained rebound in the monetary or trade sub-indices would be the first sign the Q2 downtrend is turning.
Updated: 2026-07-02 by Alexander Dentler
Key Takeaways
The June 2026 SPF survey reveals a modest decline in economic concerns. The June 2026 SPF survey shows the aggregate Concern Index at 2.83, placing it around the 63rd percentile. This marks a decrease of -0.13 from the previous month, suggesting a slight easing in overall economic anxieties. Nonetheless, the index has experienced a downward trend over the past two months, indicating persistent underlying concerns among economic observers.
The latest survey highlights significant constraints on growth, particularly in public security and trade policy. Economists have identified public insecurity as the top constraint, currently accounting for 9.2% of concerns, followed closely by US trade policy at 8.2%. Notably, public insecurity has decreased by -0.46 from the previous month, while US trade policy has seen a substantial increase of +1.80, underscoring its growing impact on economic sentiment.
Recession concerns remain moderate, reflecting a cautious outlook among economists. The perceived probability of recession stands at 10.0%, which is moderate compared to historical norms. This indicates a stable sentiment among surveyed economists when juxtaposed with the previous quarter, suggesting that while fears exist, they are not at alarming levels. The outlook for the next quarter is slightly more pronounced at 15.0%, indicating a potential uptick in recession fears.
Expectations regarding the peso's valuation indicate a prevailing sense of overvaluation among forecasters. According to forecasters, the current FX forecast misalignment reflects a perceived overvaluation of the peso, with a deviation of +0.058. This sentiment is consistent across multiple horizons, as forecasters anticipate a similar pattern in the following months, suggesting a sustained outlook of a weaker peso than expected.
Banxico's Survey of Professional Forecasters (Encuesta sobre las Expectativas de los Especialistas en Economía del Sector Privado) polls roughly 40 groups of analysts from banks, financial institutions, consultancies, and research centers. Responses are collected during the second half of each reference month — typically between the 15th and 28th — and results are published on the first business day of the following month. Because respondents form their expectations before some end-of-month official data releases, the survey provides an early window into shifting professional sentiment on inflation, growth constraints, recession risk, and exchange rates, making it a valuable leading indicator for policymakers and market participants.
Updated: 2026-07-09 by Ignacio Crane
Key Takeaways
Bond prices as of 2026-07-09 show the 10Y-3Y spread at 1.20%, reflecting a modest deceleration in nominal spreads compared to prior observations. The latest yield curve data reveals the nominal 10Y-3Y spread at 1.20%, down 0.16% from the previous observation, while the real spread stands at 0.54%, reflecting a modest uptick of 0.13%. The breakeven inflation spread, now at 0.66%, suggests that market participants anticipate a moderate inflation environment moving forward. This downward trend in nominal spreads, combined with the stability in real yields, indicates an easing of inflationary pressures.
The curve shape suggests a consensus among market participants regarding the likelihood of a hold on the policy rate, aligning with Banxico's cautious stance. Markets appear to be pricing a high probability of a modest rate cut, reflecting expectations for easing inflation alongside ongoing economic uncertainties. However, the recent uptick in real spreads may indicate that while inflationary concerns are diminishing, investors remain wary of structural challenges that could impact longer-term economic stability.
Yield Spread Update
| Spread (10Y−3Y) | 07 Jul | 08 Jul 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.19 | 1.20 | +0.010 | 1.19 |
| Real | 0.54 | 0.54 | +0.000 | 0.92 |
| Inflation | 0.65 | 0.66 | +0.009 | 0.27 |
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.
Updated: 2026-07-09 by Ignacio Crane
Key Takeaways
Mexican equity markets as of July 9, 2026, show excess returns at -0.0811, reflecting a modest uptick in volatility dynamics amid ongoing economic policy uncertainty. With data through July 9, 2026, realized volatility stands at 0.0095, indicative of a slight decline in market turbulence. The recent adjustments in excess returns signal a continued struggle for momentum, largely influenced by the interplay of external economic pressures and domestic challenges. Notably, illiquidity, as measured by the Amihud index, has not shifted materially, suggesting that market participants remain engaged yet cautious in their trading strategies.
The decomposition shows that recent volatility has been driven predominantly by US policy shocks and liquidity conditions. These factors have contributed significantly to the current landscape, with real-sector difficulties also playing a role in shaping investor perceptions. While the volatility index has experienced a slight rise of 0.136 over the past month, it remains constrained within lower historical percentiles, indicating a prevailing hesitance among market actors amidst external uncertainties.
Investor sentiment reflects a cautious outlook as evidenced by elevated levels of policy uncertainty. Recent metrics indicate heightened anxiety surrounding both public security and economic policy, underscoring the complexities at play in the current environment. The persistent concerns articulated in recent discussions among economists further amplify the need for close monitoring as the market navigates these tumultuous waters.
Volatility Measures
| Measure | Jun 2026 | Jul 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.1336 | -0.1141 | +0.0195 | Liquidity and Financing (-0.052) |
| Realized Volatility | 0.0094 | 0.0078 | -0.0017 | Liquidity and Financing (+0.000) |
| Illiquidity (Amihud) | 99.0727 | 66.6039 | -32.4688 | Real-Sector Difficulties (-17.072) |
Monthly averages. Top Driver = largest OLS category contribution to latest value.
Financial market returns, volatility, and liquidity signal investor sentiment and risk appetite. Excess returns over government bonds capture the risk premium investors demand for holding equities; wider spreads suggest higher perceived risk or stronger growth prospects. Realized volatility in a stock market index reflects uncertainty — sharp swings indicate fragile sentiment and raise the cost of capital. Illiquidity shows how trading volume and price impact interact: when liquidity dries up, small trades can move prices disproportionately, amplifying shocks. For monetary policy, these indicators matter because they shape funding costs, investment flows, and the broader transmission of rate decisions into financial conditions.
Volatility drivers are analyzed in two steps. First, Principal Component Analysis (PCA) groups the six SPF concern categories and investor sentiment indicators (AAII bull-bear spread, NAAIM exposure index) into thematic driver clusters that capture common variation. Second, an OLS regression decomposes recent volatility movements into contributions from each driver cluster, quantifying how much of the observed excess return and realized volatility is attributable to policy uncertainty, external sentiment, and domestic macro conditions. The decomposition is descriptive — it identifies contemporaneous associations, not causal effects.
Updated: 2026-07-09 by Ignacio Crane
Key Takeaways
Banxico's July 2026 credit release shows money market spreads tightening amid a backdrop of easing economic pressures. Following the latest July lending data, rate premia indicate that money market spreads are currently at 0.18, reflecting a narrowing trend. This marks a decrease of -0.0667 from the previous month, contributing to a two-month downward streak of -0.0716. Such tightening in the spreads suggests improved liquidity conditions and may enhance borrowing capacity for businesses, albeit still under the shadow of broader economic uncertainties.
Household mortgage rates remain elevated, posing challenges for affordability in the current economic landscape. The total annual cost of mortgages averages 14%, with a range spanning from 10.7% to 28.2%. While the policy rate's pass-through effect has been somewhat muted, these high costs continue to strain household budgets, potentially dampening demand in the housing market as economic conditions evolve.
Debt issuance patterns show a preference for fixed-rate instruments, signaling a cautious approach among corporates in uncertain times. The composition of corporate financing reveals that fixed-rate debt constitutes 19.47% of total issuance, compared to 10.11% for variable inflation-linked and 9.71% for other variable rates. This shift towards fixed-rate financing suggests that firms are hedging against potential interest rate increases, reflecting both a strategic response to current market conditions and a desire for stability amid rising economic policy uncertainties.
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.
