Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-05-06
The Nasdaq and S&P 500 indices rebounded, reaching historic highs. This surge reflects positive market sentiment and investor confidence. Analysts attribute the gains to strong corporate earnings and favorable economic indicators. — El Economista, 06 May 2026. Read more
In a recent auction by Banxico, Cetes experienced a decline, indicating that the market is pricing in a potential interest rate cut. Victoria Rodríguez Ceja, the Governor of Banxico, is closely monitoring these developments as they unfold. — El Economista, 05 May 2026. Read more
The Mexican peso has appreciated against the US dollar due to a recovery in risk appetite in the markets. This shift is attributed to various factors influencing investor sentiment, leading to increased demand for the peso. The article highlights the positive market dynamics that have contributed to this currency movement. — El Economista, 05 May 2026. Read more
The Mexican peso closed positively on May 5, reflecting a strong performance similar to Zaragoza. The article highlights the currency's resilience and its current exchange rate, emphasizing the market's response to recent economic developments. — El Financiero, 05 May 2026. Read more
The article discusses how high gasoline and diesel prices are affecting household finances in Mexico. It highlights that these fuel costs are often overlooked but significantly strain budgets, leading to increased expenses for families. The rising prices are attributed to various factors, including global market trends and local economic conditions. — El Economista, 05 May 2026. Read more
The article discusses the declining attractiveness of investing in Cetes due to falling yields, attributed to the anticipated interest rate cuts by Banxico under Governor Victoria Rodríguez Ceja. Investors are advised to reconsider their strategies as the economic landscape shifts, particularly with the influence of monetary policy changes. — Expansión, 05 May 2026. Read more
The European Central Bank (ECB) has issued a warning regarding the potential economic risks stemming from the ongoing conflict in the Middle East. The ECB emphasized that geopolitical tensions could impact financial stability and economic growth in the Eurozone. The statement reflects concerns over how such conflicts may influence market dynamics and investor confidence. — El Economista, 04 May 2026. Read more
The Mexican economy is experiencing a slowdown as of early 2026, impacting consumer purchasing decisions. The article discusses how this economic cooling affects household budgets and spending habits. Specific details on the implications for inflation and consumer confidence are highlighted, emphasizing the need for individuals to adapt their financial strategies in response to these changes. — El Economista, 30 Apr 2026. Read more
Wall Street closed mixed following the Federal Reserve's announcement. Investors reacted to the earnings reports from four major technology companies, which influenced market sentiment. The mixed results reflect varying investor confidence in the tech sector amid the Fed's monetary policy updates. — El Economista, 29 Apr 2026. Read more
The Mexican peso has depreciated against the dollar following a warning from the Federal Reserve regarding inflation. The Fed's comments have raised concerns about potential economic impacts, influencing currency markets. This depreciation reflects ongoing volatility in response to U.S. monetary policy signals. — El Economista, 29 Apr 2026. Read more
BofA expects Banxico rate cut to 6.50% on May 7 amid inflation By Investing.com — Google News, 05 May 2026. Read more
Mexico inflation likely slowed in April, paving way for possible rate cut By Reuters — Google News, 04 May 2026. Read more
Remittances to Mexico rise for second straight month — Google News, 04 May 2026. Read more
Ayuso confirms in Mexico that the GDP of the Community of Madrid is again above the Spanish average at 3.1% — Google News, 04 May 2026. Read more
Mexico economists raise 2026 inflation forecast, cut growth view By Investing.com — Google News, 04 May 2026. Read more
Updated: 2026-05-01 by Pablo Rivas
Key Takeaways
Following the March 26, 2026 decision, Banxico's policy rate stands at 6.75% after a cut of 0.25%. Following the March 26, 2026 decision, Banxico's policy rate stands at 6.75% after a cut of 0.25%. This marks the first reduction in rates since a prolonged period of stability, totaling a cumulative drop of 0.25% in this cycle. With 24 meetings under its belt since the last hike, this cautious adjustment reflects a delicate balance between stimulating growth and managing inflation risks.
The Fed's target rate currently sits at 3.62%, following a pause in rate adjustments since December 2025. The Fed's target rate currently sits at 3.62%, following a pause in rate adjustments since December 2025. This creates a notable rate differential of 3.12% in favor of Mexico, as Banxico continues to navigate its own economic headwinds. The coordinated moves show Banxico's role as a second mover, closely watching the Fed's lead while responding to domestic pressures.
The rate differential suggests potential challenges for capital flows, as investors may weigh the higher returns in Mexico against increased economic uncertainty. The rate differential suggests potential challenges for capital flows, as investors may weigh the higher returns in Mexico against increased economic uncertainty. This could exert pressure on the peso, particularly in light of rising concerns over public security and economic policy stability.
The central bank's policy rate is the primary tool for steering inflation and economic activity. Banxico targets 3% annual inflation and adjusts its overnight interbank rate to influence borrowing costs throughout the economy. The rate differential with the United States affects capital flows and exchange rate dynamics — a wider spread can attract foreign investment but may constrain domestic credit. Policy decisions are announced roughly every six weeks following scheduled monetary policy meetings.
Updated: 2026-05-06 by Pablo Rivas
Key Takeaways
With recent updates to the economic landscape, today's model-based expectations suggest a significant chance of no action from Banxico at their upcoming decision on February 5, 2026. The latest analysis indicates a 58% probability of holding rates steady, with the mean expected change pointing toward an adjustment of -11bp. This marks a noticeable shift from prior expectations, as the modal bucket has now settled at ±0bp, reflecting a substantial chance of no action. Additionally, there remains a 38.9% probability for a modest cut of -25bp, underscoring the cautious stance of the committee amid ongoing economic uncertainties.
Recent data inputs have sharpened the model's focus on key economic indicators, notably inflation and consumer confidence. New observations reveal that inflation has ticked higher, while consumer confidence continues to waver, reflecting the challenging economic environment. These updates are critical as they feed into the committee's deliberation process ahead of the upcoming meeting.
In this context, the key drivers of Banxico's decision-making are shaping the economic outlook in nuanced ways. Currently, upward pressures on policy are emanating from inflation trends and the high volatility in market sentiment, while economic policy uncertainty creates a slight dovish pull. The prevailing concerns surrounding public security and economic stability, reflected in Twitter discourse, are weighing heavily on sentiment and decision-making. It's important to acknowledge that while driver influences are significant, the ultimate decision will hinge on the committee's judgment, taking into account both model mechanics and prevailing economic conditions.
Ordered Probit Probabilities
| Rate Change | 04 Feb | 05 Feb 2026 | Δ |
|---|---|---|---|
| Cut | 58.4% | 42.0% | -16.4 |
| Hold | 41.6% | 58.0% | +16.4 |
| Hike | 0.0% | 0.0% | +0.0 |
| E[Δrate] | -17.5 bp | -11.3 bp | +6.2 bp |
Probabilities in %. Modal bin in bold. E[Δrate] = probability-weighted expected change in basis points.
When markets and the public can anticipate how and why the central bank acts, uncertainty falls and policy becomes more effective. Clear communication helps businesses plan investments, households make borrowing decisions, and international investors gauge currency risks. Economists often stress the importance of clarity and traceability — the ability to follow and understand decisions step by step. Without it, rate moves risk being misread, causing volatility instead of stability. With it, policy signals are more credible, anchoring expectations and strengthening the central bank's influence.
Rate-change probabilities are estimated using an ordered probit model with eight macroeconomic and financial drivers: consumer price inflation (CPI), consumer confidence, the 30-day peso/dollar change, the CETES 28-day spread, stock market growth, the yield curve slope (10Y minus 2Y), Mexico's Economic Policy Uncertainty index, and the Fed-Banxico rate differential. The model maps these drivers into probability bins for the next monetary policy decision, ranging from cuts of 50 basis points or more to hikes of the same magnitude. Coefficients are estimated on the historical record of Banxico decisions and their pre-decision data environment. Probabilities update daily as driver series refresh and should be treated as one input among many.
Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Lower Brier scores indicate better-calibrated probability forecasts.
Updated: 2026-05-06 by Pablo Rivas
Key Takeaways
Bond prices as of 2026-05-06 show the 10Y-3Y spread at 1.19%, reflecting a tightening of the nominal spread by 0.04% since the last observation. The latest yield curve data reveals that the nominal 10Y-3Y spread has tightened to 1.19% as of 2026-05-06, down from 1.23%. The real spread, which reflects actual purchasing power, has increased slightly to 0.59%, while the implied inflation spread indicates expectations of stable inflation at 0.60%. This combination hints at a cautious market, balancing concerns over economic conditions against moderate inflation expectations, which remain below long-term averages. In essence, the yield curve is signaling a propensity to expect stability, albeit with underlying tensions.
The curve shape suggests markets are aligning with a likely hold from Banxico, reflecting a 65% probability of only a minor rate adjustment. Markets appear to be pricing in a stable policy rate, as the yield curve's current configuration aligns with expectations of Banxico maintaining its stance in the upcoming meeting. The flatness in the nominal spread reflects a cautious outlook, indicating that while a -10bp adjustment is possible, it’s far from a certainty given the backdrop of rising inflationary pressures and security concerns. This divergence between a stable curve and a potentially tumultuous economic environment creates a complex scenario for decision-makers, who must navigate these competing signals.
Yield Spread Update
| Spread (10Y−3Y) | 04 May | 05 May 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.23 | 1.19 | -0.033 | 0.92 |
| Real | 0.59 | 0.59 | +0.000 | 0.71 |
| Inflation | 0.64 | 0.60 | -0.033 | 0.21 |
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: 2026-04-24 by María López
Key Takeaways
The mid-April 2026 CPI release shows headline inflation at 4.34%, slightly down from the previous reading of 4.50%. This latest figure positions inflation above Banxico’s target range, signaling sustained cost-of-living pressures for households. With the current rate sitting around the 58th percentile historically, it’s clear that inflation remains a significant concern. The slight decrease of 0.16% from the prior release indicates a potential easing but still leaves inflation well above the comfort zone for policymakers. The stakes are high as households grapple with rising prices, particularly in essential goods and services.
Core inflation, which excludes volatile food and energy prices, is at 4.36%, just above the headline rate and also higher than the target. This figure reflects underlying inflation pressures that are diverging from the target, albeit with a slight decline of 0.13% from last month. The core rate remains elevated, suggesting that inflation is not merely a fleeting phenomenon driven by external shocks but a more persistent issue. As this rate hovers near the 73rd percentile, it underscores the challenge for Banxico, which must balance combating inflation with addressing broader economic vulnerabilities.
Trade prices reveal a complex landscape for the economy, particularly with export prices surging to 14.31%. This substantial uptick places export prices in the 93rd percentile, reflecting strong demand and potential supply chain constraints. Import prices, while more subdued at 3.88%, still indicate rising costs that could contribute to domestic inflationary pressures. The widening gap between export and import price dynamics suggests that while some sectors may thrive, others could face increasing cost burdens, complicating the economic outlook for policymakers.
| 1H Apr 2026 | 1H Apr 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 4.3 | — | — | 4.9 | 4.9 | +0.00 |
| Core CPI | 4.4 | — | — | 4.4 | 4.4 | +0.00 |
| Export Price Index | — | — | — | 6.0 | 6.0 | +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: 2026-04-24 by María López
Key Takeaways
The February 2026 IMSS release shows unit labor costs at 3.66%, indicating a rise in manufacturing wages outpacing productivity growth. Following February's formal sector wage data, ULC in manufacturing is climbing, highlighting the pressure of rising wages on production efficiency. This 3.66% figure is around the 80th percentile, suggesting significant upward momentum in labor costs. The implications are clear: employers may face tighter margins, potentially passing costs onto consumers, which could fuel inflationary trends.
Real wages in the formal sector are showing a positive trend, signaling improved purchasing power for workers. Manufacturing real wages grew by 4.48%, reflecting a robust increase that boosts household income and spending capacity. In contrast, retail real wages are still positive but lag behind at 3.25%, with a recent decline that points to potential purchasing power erosion in that sector. This divergence suggests that while some workers are enjoying better financial conditions, others are facing stagnation, which could affect overall consumer sentiment.
Across sectors, the divergence in real wage growth is stark, with manufacturing clearly outperforming retail. Manufacturing is thriving with a strong 4.48% growth in real wages, while retail struggles at only 3.25%, following a recent dip. This gap signals that while manufacturers are capitalizing on labor gains, retail workers are not sharing in the same level of economic uplift. As inflation concerns loom, this discrepancy might lead to uneven consumer spending patterns, impacting overall economic stability.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 4.1 | 4.1 | +0.00 |
| ULC Retail | — | — | — | 1.2 | 1.2 | +0.00 |
| Real Wage Mfg | — | — | — | 4.3 | 4.3 | +0.00 |
| Real Wage Retail | — | — | — | 2.8 | 2.8 | +0.00 |
All values in % (MoM, seasonally adjusted). "Error" = actual − previous forecast. "Revision" = change in 12-month outlook. "—" = no prior forecast available.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Twelve-month-ahead forecasts for unit labor costs and real wages in manufacturing and retail are produced using a Seasonal Autoregressive Integrated Moving Average with eXogenous inputs (SARIMAX) model. The model is estimated on seasonally adjusted month-over-month percentage changes, with all four series — ULC manufacturing, ULC retail, real wage manufacturing, and real wage retail — entering as joint endogenous variables. No external auxiliary data feed the forecast; the model relies solely on the internal dynamics and cross-series interactions of the wage and productivity data. Forecast confidence intervals widen over the projection horizon.
Out-of-sample backtest over 24 evaluation windows using the SARIMAX. Out-of-sample backtest over 24 evaluation windows using the SARIMAX. RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. ULC Manufacturing (RMSE 2.97 vs 3.21 naive, +7% improvement, n=24); ULC Retail (RMSE 5.33 vs 5.22 naive, n=23); Real Wage Manufacturing (RMSE 2.20 vs 2.62 naive, +16% improvement, n=24); Real Wage Retail (RMSE 3.05 vs 2.97 naive, n=23).
Updated: 2026-03-21 by María López
Key Takeaways
Following the latest quarterly GDP release from INEGI, real GDP growth in Mexico has surged to an impressive 8.81%, reflecting a significant increase of 6.51 percentage points from previous estimates. The nowcast estimate, updated with the latest data, shows that real GDP growth has leapt to 8.81% for Q4 2025, marking a notable change of +6.51pp from previous projections. This explosive growth rate highlights the dynamic recovery occurring within the economy, setting a positive tone for future economic discussions and policy deliberations.
Private consumption continues to play a pivotal role in this economic momentum, reaching a staggering growth rate of 10.48%. Household spending is clearly supporting overall activity, significantly outpacing GDP growth. This surge in private consumption signals strong domestic demand, which is essential for sustaining the recovery and potentially alleviating some of the pressures from external factors.
Exports, however, tell a different story, with growth currently at -1.01%, reflecting a substantial decline of 6.22 percentage points. This downturn in export activity indicates weakening external demand, a concerning signal for an economy that heavily relies on trade, especially with key partners. It raises alarms about competitiveness and the potential impact on sectors tied to global markets, which could dampen growth if the trend continues.
On the flip side, imports are showing a robust growth rate of 7.47%, up by 2.10 percentage points from previous estimates. Domestic absorption is clearly on the rise, suggesting that businesses and consumers are optimistic and willing to invest in goods from abroad. This trend can bolster local economic activity, despite the underlying challenges posed by sluggish export performance.
DFM GDP Nowcasts
| Component | Last Obs. (Q4 2025) | Nowcast (Q4 2025) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 9.60% | 8.81% | 8.81% | +0.00 |
| Private Consumption | 5.88% | 10.48% | 10.48% | +0.00 |
| Imports | 28.72% | 7.47% | 7.47% | +0.00 |
| Exports | -1.01% | -1.01% | -1.01% | +0.00 |
QoQ annualized, seasonally adjusted. Nowcast = DFM filtered estimate using higher-frequency inputs. "Revision" = change from previous run.
Real activity data tracks the economy's engine — output, spending, and trade — while nowcasts bridge the lag between releases. Real GDP captures total production; private consumption reflects household demand; exports and imports reveal external demand and the flow of inputs for Mexico's trade-exposed, manufacturing-heavy economy. Shifts in U.S. demand, global prices, and the peso often show up first in trade, then filter into GDP and consumption. Because official series arrive with delays and revisions, model-based nowcasts provide an early, probabilistic read for policy timing — useful if treated with uncertainty bands and cross-checked against higher-frequency signals.
A Dynamic Factor Model (DFM) nowcasts quarterly GDP and its demand components — private consumption, imports, and exports — using 14 higher-frequency inputs. These include monthly employment indicators, industrial production (IGAE), consumer confidence, capacity utilization, retail sales, and private consumption, plus quarterly GDP sector breakdowns. The model extracts common factors via the Kalman filter, updating the nowcast each time any input series receives new data. Nowcast estimates are conditional expectations that narrow as more data arrive within each quarter.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Real GDP (RMSE 3.90 vs 3.82 naive, n=12); Private Consumption (RMSE 5.41 vs 2.51 naive, n=12); Exports (RMSE 22.26 vs 18.28 naive, n=12); Imports (RMSE 11.34 vs 17.09 naive, +34% improvement, n=12).
Updated: 2026-05-04 by Alexander Dentler
Key Takeaways
The latest ENOE survey for October 2025 reveals a notable decline in the unemployment rate, reflecting ongoing labor market adjustments. The October 2025 ENOE survey shows unemployment at 3.31%, a decrease of 0.131% from the previous month. This level is situated around the 2nd percentile historically, indicating a robust trend towards lower unemployment. The downward movement over the past month aligns with broader economic conditions, suggesting a slight easing of labor market pressures even as uncertainties loom.
By gender, the labor market dynamics reveal distinct trends in unemployment rates for men and women. Male and female unemployment rates both experienced upward pressure, with male unemployment at 3.51% and female unemployment at 3.62%. The relatively small difference of 0.11% highlights a concerning trend where both genders are grappling with increased unemployment, albeit at historically elevated levels, particularly for females.
The share of informal workers continues to reflect significant challenges within the labor market. Informal employment is currently at 55.9%, indicating a rise of 0.353% from the previous month. This elevated level, around the 98th percentile historically, suggests persistent structural issues within the economy that may hinder formal job growth and overall labor market stability.
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: 2026-05-05 by Pablo Rivas
Key Takeaways
The April 2026 SPF survey shows the aggregate Concern Index at 2.98, placing it in the 66th percentile, with a notable rise of 0.15 from the previous month. The April 2026 SPF survey shows the aggregate Concern Index at 2.98, placing it in the 66th percentile, with a notable rise of 0.15 from the previous month. This uptick is significant as it reflects a growing sense of unease among economists, marking a two-month upward streak. With the index's recent rise, it suggests increasing vigilance on potential threats to economic stability, which could impact decision-making for both policymakers and investors.
Economists have identified public insecurity as the top growth constraint, currently at 8.6%. Economists have identified public insecurity as the top growth constraint, currently at 8.6%, followed closely by US trade policy at 7.1% and a lack of structural change at 4.7%. The most significant mover this month is public insecurity, which has decreased by 1.02% month-on-month. This shifting landscape indicates that concerns around security are still paramount, yet some optimism might be creeping into other areas, particularly trade policy, as it shows signs of stabilization.
The perceived probability of recession stands at 20.0%, which is elevated relative to historical norms, placing it in the 68th percentile. The perceived probability of recession stands at 20.0%, which is elevated relative to historical norms, placing it in the 68th percentile. This figure reflects a moderate concern compared to the previous quarter, suggesting that while the fears are present, they are not overwhelming at this moment. Looking ahead, the next quarter's probability of 24.5% indicates that economists are bracing for a potential uptick in recession fears as conditions evolve.
According to forecasters, the peso is viewed as overvalued, with a current-month misalignment of +0.101. According to forecasters, the peso is viewed as overvalued, with a current-month misalignment of +0.101. This suggests that the peso is weaker than expected, and the misalignment persists across future horizons, reinforcing the sentiment that economic pressures may continue to weigh on the currency. Such a perspective on FX expectations could influence monetary policy decisions, particularly as Banxico navigates this complex economic landscape.
Banxico's Survey of Professional Forecasters (Encuesta sobre las Expectativas de los Especialistas en Economía del Sector Privado) polls roughly 40 groups of analysts from banks, financial institutions, consultancies, and research centers. Responses are collected during the second half of each reference month — typically between the 15th and 28th — and results are published on the first business day of the following month. Because respondents form their expectations before some end-of-month official data releases, the survey provides an early window into shifting professional sentiment on inflation, growth constraints, recession risk, and exchange rates, making it a valuable leading indicator for policymakers and market participants.
Updated: 2026-05-06 by Pablo Rivas
Key Takeaways
Mexican equity markets as of May 6, 2026, show excess returns at 0.2107, reflecting a notable rise amid economic turbulence. With data through May 6, 2026, we observe a slight uptick in excess returns, now standing at 0.2107, which suggests markets are still finding their footing despite ongoing turbulence. Realized volatility has also increased, with the Parkinson measure at 0.0093, signaling that market participants are bracing for potential shifts. Notably, illiquidity has remained relatively stable, indicating that while traders are active, there may be underlying caution. This delicate balance reflects the broader anxieties in the market as stakeholders digest the latest economic signals.
The decomposition shows that recent volatility has been driven primarily by US policy shocks and lingering uncertainty around domestic economic conditions. Recent volatility has been particularly influenced by external factors, with US policy shocks contributing significantly to the changing landscape. Additionally, uncertainty surrounding local economic policy—fueled by concerns over public security—has further complicated the situation, creating a perfect storm for volatility. This interplay of local and external pressures underscores the importance of paying close attention to both domestic developments and global trends.
Investor sentiment remains cautious, with policy uncertainty levels reflecting heightened apprehensions in the market. Investor sentiment has been increasingly alarmed, as evidenced by rising levels of economic policy uncertainty (EPU) and commentary surrounding public security issues. The latest figures indicate a growing unease among market participants, with many concerned about the potential implications for economic growth and stability. As these sentiments take root, they will likely continue to shape market dynamics, urging stakeholders to tread carefully in their decision-making.
Volatility Measures
| Measure | Apr 2026 | May 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.0811 | 0.5109 | +0.5920 | US Policy Shocks (+0.152) |
| Realized Volatility | 0.0095 | 0.0106 | +0.0011 | Investor Sentiment (-0.001) |
| Illiquidity (Amihud) | 108.9576 | 130.8489 | +21.8912 | Investor Sentiment (-19.424) |
Monthly averages. Top Driver = largest OLS category contribution to latest value.
Financial market returns, volatility, and liquidity signal investor sentiment and risk appetite. Excess returns over government bonds capture the risk premium investors demand for holding equities; wider spreads suggest higher perceived risk or stronger growth prospects. Realized volatility in a stock market index reflects uncertainty — sharp swings indicate fragile sentiment and raise the cost of capital. Illiquidity shows how trading volume and price impact interact: when liquidity dries up, small trades can move prices disproportionately, amplifying shocks. For monetary policy, these indicators matter because they shape funding costs, investment flows, and the broader transmission of rate decisions into financial conditions.
Volatility drivers are analyzed in two steps. First, Principal Component Analysis (PCA) groups the six SPF concern categories and investor sentiment indicators (AAII bull-bear spread, NAAIM exposure index) into thematic driver clusters that capture common variation. Second, an OLS regression decomposes recent volatility movements into contributions from each driver cluster, quantifying how much of the observed excess return and realized volatility is attributable to policy uncertainty, external sentiment, and domestic macro conditions. The decomposition is descriptive — it identifies contemporaneous associations, not causal effects.
Updated: 2026-05-06 by Pablo Rivas
Key Takeaways
Banxico's May 2026 credit release shows money market spreads tightening, signaling shifting lending conditions. Following the latest May lending data, rate premia reveal a narrowing trend with funding spreads and TIIE rates now sitting at 0.00% and 0.30%, respectively. This tightening, with the TIIE 28d down from 0.32%, reflects a cautious market response amid growing economic policy uncertainty. As spreads tighten, this could imply improved access to credit for businesses, albeit against a backdrop of rising external pressures.
Household mortgage rates remain elevated, impacting affordability for potential buyers. The total annual cost of mortgages (CAT) averages 13.9%, with a range between 10.7% and 28.2%. While the policy rate pass-through is evident, the higher costs may deter some buyers, particularly as consumer confidence wobbles and economic uncertainties loom. This situation suggests that while financing is available, the affordability pinch could continue to dampen housing market activity.
Debt issuance patterns show a preference shift towards fixed-rate financing among corporations. Corporate financing trends indicate a stable balance with fixed rates making up 18.74% of total debt issuance, alongside 10.12% in variable inflation-linked options. This shift towards fixed rates suggests firms are locking in costs amid volatile economic conditions, reflecting a strategic move to mitigate interest rate risks. As economic pressures mount, firms seem to prefer stability in their financing strategies.
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.
