Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-06-03
Wall Street closed with gains, while the Mexican Stock Exchange (BMV) increased by 1.1% after three consecutive days of declines. This positive shift in the markets reflects a recovery trend following recent downturns. — El Financiero, 02 Jun 2026. Read more
In the latest auction conducted by Banxico, the rates for Cetes mostly decreased. This trend reflects the current monetary policy environment under the leadership of Governor Victoria Rodríguez Ceja. The auction results indicate a shift in investor sentiment and demand for these government securities. — El Economista, 02 Jun 2026. Read more
The Mexican peso has strengthened against the US dollar due to renewed optimism regarding a potential agreement between the United States and Iran. This development has positively influenced market sentiment, contributing to the peso's appreciation. Investors are closely monitoring the situation for further implications on currency exchange rates. — El Economista, 02 Jun 2026. Read more
The Mexican peso has shown a recovery against the US dollar, closing at a stronger rate today. This positive movement in the currency is seen as a sign of improved market confidence. The article highlights the ongoing fluctuations in exchange rates and their implications for the economy. — El Financiero, 02 Jun 2026. Read more
The Mexican peso has gained value against the US dollar due to renewed expectations of a potential agreement between the United States and Iran. This development has positively influenced market sentiment, contributing to the peso's appreciation in the foreign exchange market. — El Economista, 02 Jun 2026. Read more
Banco Plata outlines the process for investing in the US stock market, highlighting new requirements set by the CNBV for obtaining a license. The article details the steps investors must follow and emphasizes the importance of compliance with these regulations to ensure a smooth investment experience. — Expansión, 02 Jun 2026. Read more
The Mexican peso has declined as negotiations for a peace agreement between the United States and Iran remain unresolved. The exchange rate reflects market concerns over the geopolitical situation, impacting investor confidence. The article highlights the direct correlation between the stalled talks and the peso's performance in the currency market. — El Financiero, 01 Jun 2026. Read more
The Mexican peso appreciated against the US dollar during the month of May. This movement reflects ongoing economic trends and market dynamics. The article does not provide specific figures or reasons for the peso's performance. — El Economista, 01 Jun 2026. Read more
The Mexican peso has declined against the dollar for the second consecutive day, driven by rising concerns over the ongoing war and inflation. Market analysts are closely monitoring these developments as they impact currency stability. — El Economista, 27 May 2026. Read more
Canada calls for US and Mexico free trade agreement to be renewed for 16 years - ABC News — Google News, 03 Jun 2026. Read more
Canada, Mexico urge renewal of free trade deal with US — Google News, 03 Jun 2026. Read more
Canada calls on US, Mexico to renew free-trade deal for another 16 years — Google News, 03 Jun 2026. Read more
Canada and Mexico tell US they want free trade deal renewed — Google News, 02 Jun 2026. Read more
Canada pushes for renewal of free trade agreement with US and Mexico — Google News, 02 Jun 2026. Read more
Mexico Urges Canada to Join USMCA Talks — Google News, 02 Jun 2026. Read more
Canada Formally Submits Proposal to U.S. and Mexico for 16-Year USMCA Renewal — Google News, 02 Jun 2026. Read more
Perspectives on Mexico's Economic Future, USMCA Negotiations — Google News, 02 Jun 2026. Read more
Canada and Mexico Push for 16‑Year USMCA Extension Amid Negotiation Tensions — Google News, 02 Jun 2026. Read more
Mexico backs extending USMCA trade pact for 16 years — Google News, 02 Jun 2026. Read more
Updated: 2026-05-09 by Alexander Dentler
Key Takeaways
Following the May 7, 2026 decision, Banxico's policy rate stands at 6.50%, reflecting a cut of 0.25% as part of a broader trend of easing monetary conditions. After Banxico's May 7 meeting, the target rate has been adjusted to 6.50%, representing a significant policy shift in light of persistent economic challenges. The recent cut adds to the previous reduction in March, indicating a broader trend towards easing as the central bank seeks to support economic stability amid rising uncertainty. With this latest decision, the cumulative change now reflects a total decline of 0.50% since March, signaling a responsive approach to current economic conditions.
The Fed's target rate currently sits at 3.62%, establishing a rate differential of 2.88% in favor of Mexico. Relative to the United States, Banxico's current policy stance reveals a significant gap of 2.88% between the two central banks. While the Fed has maintained its rate amidst ongoing economic assessments, Banxico's recent cuts indicate a more aggressive response to domestic pressures. This first-mover dynamic, where the Fed has consistently acted prior to Banxico, is an essential consideration for understanding the evolving landscape of monetary policy coordination between the two economies.
The rate differential presents both opportunities and challenges for capital flows and foreign exchange stability in Mexico. The rate differential creates a complex environment for market participants, influencing capital flows into and out of Mexico. This significant gap could lead to heightened interest from foreign investors seeking higher yields, yet it also raises concerns over potential currency volatility. As Banxico navigates this nuanced landscape, maintaining stability amid external pressures will be pivotal for sustained economic growth.
The central bank's policy rate is the primary tool for steering inflation and economic activity. Banxico targets 3% annual inflation and adjusts its overnight interbank rate to influence borrowing costs throughout the economy. The rate differential with the United States affects capital flows and exchange rate dynamics — a wider spread can attract foreign investment but may constrain domestic credit. Policy decisions are announced roughly every six weeks following scheduled monetary policy meetings.
Updated: 2026-06-03 by Alexander Dentler
With recent updates to economic indicators, including CPI movements and shifts in economic policy uncertainty, our model-based expectations suggest a substantial chance of no action at Banxico's next meeting on February 5, 2026. The current expected move indicates an average cut of 11bp, reflecting a modal bucket of ±0bp, where the probability of holding rates steady stands at about 58%, unchanged from prior assessments. This suggests a notable refinement in our outlook, as the probability of no action has increased, underscoring the committee's cautious approach amid prevailing uncertainties. In light of the updated economic landscape, the model points toward likely inaction, with a 58% probability of holding rates steady. The expected average cut of 11bp indicates that while there is a marked dovish sentiment, the committee remains wary of external pressures. The modal bucket has shifted to ±0bp, reflecting the current complexities faced by policymakers, while the probability of a -25bp cut remains relevant at approximately 39%. This nuanced positioning reflects the delicate balance the committee must navigate in the context of rising inflationary pressures and geopolitical risks.
In terms of recent data, the key drivers that received new observations include CPI and economic policy uncertainty, both of which have shown notable trends since the last update. CPI data has ticked higher, reinforcing inflation concerns, while economic policy uncertainty remains elevated, further complicating the decision-making environment. The latest updates indicate that CPI has ticked higher, adding pressure to the already delicate inflation landscape. Additionally, the sustained level of economic policy uncertainty suggests a challenging backdrop for Banxico as it contemplates its next steps. This combination of factors contributes to a more cautious outlook for the committee, reflecting the need for careful deliberation in the face of rising inflation risks.
On examining the underlying drivers, the current economic context reveals a slight dovish pull stemming from cooling labor markets and rising bond yields, while inflationary pressures exert moderate hawkish pressure. The most significant influences appear to be the rising CPI, which is contributing to inflationary concerns, alongside the pronounced economic policy uncertainty impacting decision-making. Other drivers, such as credit spreads and the exchange rate, exhibit negligible impact on the current policy outlook. The interplay of these factors illustrates a complex decision-making landscape for Banxico, where rising inflation and economic uncertainties are at the forefront. The heightened economic policy uncertainty acts as a critical proxy, showcasing the challenges the committee faces in balancing stability with the need to respond to inflationary signals. Ultimately, the decision will hinge not solely on model mechanics, but also on the committee’s judgment in navigating these multifaceted economic dynamics.
Ordered Probit Probabilities
| Rate Change | 04 Feb | 05 Feb 2026 | Δ |
|---|---|---|---|
| Cut | 58.4% | 42.0% | -16.4 |
| Hold | 41.6% | 58.0% | +16.4 |
| Hike | 0.0% | 0.0% | +0.0 |
| E[Δrate] | -17.5 bp | -11.3 bp | +6.2 bp |
Probabilities in %. Modal bin in bold. E[Δrate] = probability-weighted expected change in basis points.
When markets and the public can anticipate how and why the central bank acts, uncertainty falls and policy becomes more effective. Clear communication helps businesses plan investments, households make borrowing decisions, and international investors gauge currency risks. Economists often stress the importance of clarity and traceability — the ability to follow and understand decisions step by step. Without it, rate moves risk being misread, causing volatility instead of stability. With it, policy signals are more credible, anchoring expectations and strengthening the central bank's influence.
Rate-change probabilities are estimated using an ordered probit model with eight macroeconomic and financial drivers: consumer price inflation (CPI), consumer confidence, the 30-day peso/dollar change, the CETES 28-day spread, stock market growth, the yield curve slope (10Y minus 2Y), Mexico's Economic Policy Uncertainty index, and the Fed-Banxico rate differential. The model maps these drivers into probability bins for the next monetary policy decision, ranging from cuts of 50 basis points or more to hikes of the same magnitude. Coefficients are estimated on the historical record of Banxico decisions and their pre-decision data environment. Probabilities update daily as driver series refresh and should be treated as one input among many.
Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Out-of-sample backtest across 24 past meetings: the modal prediction matched the actual decision 46% of the time, directional accuracy (hike/hold/cut) was 67%, Brier score 0.720. Lower Brier scores indicate better-calibrated probability forecasts.
Updated: 2026-06-03 by Alexander Dentler
Key Takeaways
As of 2026-06-03, bond prices indicate a nominal 10Y-3Y spread of 1.34%, alongside a real spread of 0.45%. The latest yield curve data reveals a nominal 10Y-3Y spread at 1.34%, marking an increase of 0.08% compared to the prior observation. The real spread stands at 0.45%, reflecting a slight decline of 0.13% over the same period. Notably, the implied inflation spread, now at 0.88%, suggests that market participants anticipate some inflationary pressures ahead, albeit without extreme concerns. This combination of spreads indicates a market grappling with the dual challenges of growth and inflation expectations.
The curve shape suggests a cautious alignment with current policy expectations, as markets continue to price in an 85% probability of Banxico maintaining the policy rate steady. Markets appear to be pricing a steady policy stance from Banxico, consistent with the prevailing economic uncertainty and cooling labor markets. However, the recent uptick in nominal spreads may hint at a growing concern over inflationary pressures, suggesting that the committee’s cautious approach could be tested should these trends persist. This reflects a delicate balance for policymakers as they navigate the complex landscape of economic stability and inflation risks.
Yield Spread Update
| Spread (10Y−3Y) | 01 Jun | 02 Jun 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.39 | 1.34 | -0.046 | 1.03 |
| Real | 0.45 | 0.45 | +0.003 | 0.73 |
| Inflation | 0.93 | 0.88 | -0.049 | 0.30 |
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: 2026-05-29 by María López
Key Takeaways
The mid-May 2026 CPI release shows headline inflation at 4.01%, which remains above Banxico's target range of 2%-4%. The mid-May 2026 CPI release shows headline inflation at 4.01%, sitting at the 46th percentile of historical data. While this figure is a slight improvement, down 0.22% from the previous release, it's still firmly above Banxico's target of 3%. This persistent overshoot highlights ongoing cost pressures in the economy, creating an urgent need for policymakers to weigh their options carefully.
Core inflation, which excludes volatile food and energy prices, is currently at 4.31%, indicating an underlying inflation trend that’s even more concerning. Core inflation, which excludes volatile components, is clocking in at 4.31%, around the 72nd percentile historically. Although it increased marginally by 0.003% from the last reading, it still diverges from the 3% target, suggesting that inflationary pressures are embedded in the economy beyond just temporary factors. This divergence between core and headline inflation underscores the complexity facing Banxico as it navigates monetary policy amidst these turbulent waters.
Trade prices are signaling volatility, with export prices particularly showing significant upward momentum. Trade prices reflect notable trends, with export price inflation at 15.25%, marking a staggering rise that places it in the 93rd percentile historically. This robust increase in export prices, up 0.12% from the previous month, further complicates the inflation landscape and suggests that global market dynamics are exerting pressure on domestic prices. Import prices also rose, though less dramatically, indicating a broader inflationary environment that could challenge Banxico's efforts to stabilize the economy.
| 1H May 2026 | 1H May 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 4.0 | — | — | 4.7 | 4.7 | +0.00 |
| Core CPI | 4.3 | — | — | 4.2 | 4.2 | +0.00 |
| Export Price Index | — | — | — | 5.0 | 5.0 | +0.00 |
| Import Price Index | — | — | — | 5.0 | 5.0 | +0.00 |
All values in percentage points (YoY, seasonally adjusted). "Error" = actual minus previous forecast. "Revision" = change in 12-month outlook since last update. "—" = no prior forecast available.
The Consumer Price Index (CPI) measures changes in the cost of a representative basket of goods and services purchased by Mexican households. Banxico targets 3% annual inflation with a tolerance band of 2%-4%. Core CPI — which excludes volatile food and energy prices — reveals underlying inflation trends that guide monetary policy. Import and export price indices extend the picture by linking Mexico's inflation dynamics to global markets, trade flows, and currency movements.
Headline CPI, core CPI, export prices, and import prices are projected six months ahead using a Vector Autoregression (VAR). The four series are estimated jointly, so each informs the others' forecasts through lagged interactions. Projections update each time new CPI data arrive and may shift materially after revisions.
Out-of-sample backtest over 68 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 68 evaluation windows using the Vector Autoregression (VAR). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Headline CPI (RMSE 1.10 vs 1.04 naive, n=68); Core CPI (RMSE 0.66 vs 1.08 naive, +39% improvement, n=68); Export Price Inflation (RMSE 7.27 vs 7.77 naive, +6% improvement, n=56); Import Price Inflation (RMSE 2.99 vs 2.05 naive, n=56).
Updated: 2026-03-27 by Alexander Dentler
Key Takeaways
The latest update on the SHF House Price Index reveals that house price inflation reached 8.92% YoY as of October 1, 2025, reflecting a continuing trend of rising prices over the past three quarters. This inflation rate stands above the historical average, which has ranged from 2.0% to 11.7%, positioning it in the 80th percentile since 2006. Notably, house price inflation exceeds both headline CPI at 4.02% and housing CPI at 3.44%, highlighting a significant premium of 4.90 percentage points over the former and 5.49 percentage points over the latter. This divergence suggests a robust demand in the housing market that may not be fully captured by broader inflation metrics, although the recent DFM nowcast hints at potential downward pressure.
The Dynamic Factor Model (DFM) nowcast indicates a contrasting picture, with a current estimate of 7.72% YoY as of February 1, 2026, trailing the observed inflation by 1.20 percentage points. This divergence implies that auxiliary indicators, particularly mortgage lending trends and housing CPI components, are exerting downward pressure on the underlying trend. The model suggests that while house prices have been rising, there may be emerging signs of mean reversion, prompting a cautious stance on future price increases. Policymakers and market participants should consider this nuanced interplay when assessing the housing market's outlook.
DFM Nowcast Comparison
| Observed | Nowcast | Prev. Nowcast | Gap | Revision | |
|---|---|---|---|---|---|
| SHF House Price Inflation (YoY) | 8.92% | 7.72% | 7.72% | -1.20 | +0.00 |
Observed: 2025-Q4. Nowcast: 2026-02. Previous nowcast: 2026-02. "Gap" = nowcast − observed. "Revision" = change in nowcast since previous run.
The SHF House Price Index is published quarterly by Sociedad Hipotecaria Federal, Mexico's federal mortgage development bank, typically around 40 days after the reference quarter ends. It is constructed from mortgage appraisal data (avalúos) using a Case-Shiller repeat-sales methodology, with breakdowns by state, new vs. used housing, and market segment (affordable vs. mid-to-high-end). Because the index reflects prices at the point of mortgage origination, it captures credit-driven demand rather than asking prices, making it a tighter gauge of actual transaction values and collateral quality across the housing market.
A Dynamic Factor Model (DFM) filters the quarterly SHF House Price Index using five Banxico auxiliary series — the funding rate, mortgage lending volumes, a housing purchase survey indicator, the SPF unemployment forecast, and construction activity — plus two CPI components (headline and housing subcategory). The model extracts a common factor from these seven indicators, producing a smoothed nowcast that updates between quarterly SHF releases whenever auxiliary data arrive. This filtered estimate helps distinguish persistent trends from quarterly noise in the observed house price series.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. House Price Nowcast (RMSE 1.32 vs 0.66 naive, n=12).
Updated: 2026-04-16 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: 2026-05-22 by María López
Key Takeaways
The March 2026 IMSS release shows unit labor costs at 2.80%, signaling that wages are outpacing productivity growth in manufacturing. This rising ULC, now at the 70th percentile, reflects a concerning trend where labor costs are increasing faster than productivity. With the monthly growth rate down by 0.21, businesses may face mounting cost pressures, potentially leading to inflationary strains down the line. A tighter grip on productivity could be essential to maintaining competitiveness in this environment.
Real wages in the formal sector are showing positive momentum, with growth at 4.47% in manufacturing and 3.35% in retail. This uptick in real wages indicates that purchasing power is improving for households, offering a much-needed boost amid inflation concerns. With positive gains in both sectors, workers are better positioned to manage rising costs, but sustaining this trend will be crucial for overall economic health.
Across sectors, manufacturing and retail diverge significantly in the wage-productivity dynamic, with manufacturing ULC rising while retail ULC lags behind at 0.98%. Manufacturing is currently outperforming retail, indicating a stronger position in terms of wage growth relative to productivity. Retail’s slower adjustments may put pressure on its competitiveness and could squeeze margins, highlighting a fundamental split in sectoral health amid broader economic challenges.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 3.8 | 3.8 | +0.00 |
| ULC Retail | — | — | — | 0.2 | 0.2 | +0.00 |
| Real Wage Mfg | — | — | — | 5.0 | 5.0 | +0.00 |
| Real Wage Retail | — | — | — | 2.9 | 2.9 | +0.00 |
All values in % (MoM, seasonally adjusted). "Error" = actual − previous forecast. "Revision" = change in 12-month outlook. "—" = no prior forecast available.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Twelve-month-ahead forecasts for unit labor costs and real wages in manufacturing and retail are produced using a Seasonal Autoregressive Integrated Moving Average with eXogenous inputs (SARIMAX) model. The model is estimated on seasonally adjusted month-over-month percentage changes, with all four series — ULC manufacturing, ULC retail, real wage manufacturing, and real wage retail — entering as joint endogenous variables. No external auxiliary data feed the forecast; the model relies solely on the internal dynamics and cross-series interactions of the wage and productivity data. Forecast confidence intervals widen over the projection horizon.
Out-of-sample backtest over 24 evaluation windows using the SARIMAX. Out-of-sample backtest over 24 evaluation windows using the SARIMAX. RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. ULC Manufacturing (RMSE 2.97 vs 3.21 naive, +7% improvement, n=24); ULC Retail (RMSE 5.33 vs 5.22 naive, n=23); Real Wage Manufacturing (RMSE 2.20 vs 2.62 naive, +16% improvement, n=24); Real Wage Retail (RMSE 3.05 vs 2.97 naive, n=23).
Updated: 2026-03-21 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: 2026-05-30 by Alexander Dentler
Key Takeaways
The latest ENOE survey for March 2026 reveals an uptick in unemployment, underscoring ongoing labor market challenges in Mexico. The March 2026 ENOE survey shows unemployment at 3.98%, marking a notable increase from the previous rate of 3.85%. This shift places the unemployment rate at a historically elevated level, as it now sits around the 100th percentile. The trend indicates a concerning rise in joblessness, particularly as the labor market grapples with broader economic uncertainties.
By gender, the divergence in unemployment rates illustrates distinct challenges faced by men and women in the labor market. Male and female unemployment rates are currently at 3.34% and 3.53%, respectively, with both genders experiencing slight increases. Notably, the male unemployment rate has shown a more pronounced decline over the past six months compared to females, highlighting the ongoing disparities in labor market recovery.
Informal employment remains a significant concern, reflecting broader economic dynamics. The share of informal workers stands at 55.6%, indicating a slight increase from the previous month. This persistent high level of informality suggests underlying vulnerabilities in the labor market, pointing towards potential challenges in job security and economic stability.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.76% | 3.44% | — | — |
| Underemployment Rate | 10.28% | 12.31% | — | — |
| Male Unemployment | 2.45% | 3.34% | — | — |
| Female Unemployment | 2.71% | 3.53% | — | — |
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 19 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 19 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 0.56 vs 0.13 naive, n=16); 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: 2026-05-13 by María López
Key Takeaways
The latest INEGI productivity data for Q1 2026, released on May 13, indicates secondary sector output at 99.9, reflecting a decline of -0.632 from the previous month. INEGI's Q1 2026 productivity release shows secondary sector output at 99.9, down -0.632 from the previous month and around the 49th percentile historically. The construction sector is pulling down the overall index, while mining has posted modest gains recently. This mixed performance highlights a recovery that is not yet broad-based, leaving the economy vulnerable to external shocks.
Manufacturing composites show diverging trends, raising questions about sustainability in the sector. Across the PCA indices, productivity is at a critical juncture, with output declining by -0.223 recently, while sales have shown resilience with a small increase. However, labor demand remains weak, signaling potential sustainability concerns in the recovery. The disconnect between rising sales and stagnant labor demand could indicate that businesses are cautious about future hiring amid ongoing economic uncertainties.
The top-performing subsectors are food and transport equipment, while energy continues to lag behind. Within manufacturing, the food sector stands out with strong productivity gains, pushing the index to a record high, while transport equipment has also seen a notable increase. Conversely, the energy subsector remains a drag on overall performance, reflecting ongoing challenges. This concentration of growth in food underscores its critical role in stabilizing the manufacturing landscape amid broader economic headwinds.
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: 2026-05-09 by Alexander Dentler
The April 2026 consumer confidence survey shows the general index at 1.26, placing it in the 88th percentile and indicating elevated sentiment among consumers. INEGI's latest April release reveals confidence at a level that is notably optimistic, as the general index has risen marginally by 0.04. This sentiment stands in stark contrast to the housing-specific index, which has dipped by 0.17, suggesting a divergence in consumer outlook between general economic conditions and housing stability. The elevated general confidence, positioned 1.3σ above the mean, implies that consumers remain buoyant despite the challenges faced in the housing sector, potentially reflecting a broader resilience in spending behavior for non-housing-related purchases.
PCA Confidence Indices
| Index | Mar 2026 | Apr 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.22 | 1.26 | +0.04 |
| Housing Appetite | 0.81 | 0.64 | -0.17 |
| Durables Appetite | 0.84 | 0.99 | +0.16 |
Values are z-scores (0 = historical mean, ±1 = one standard deviation).
The ENCO (Encuesta Nacional sobre Confianza del Consumidor) is conducted jointly by INEGI and Banco de México. Roughly 2,300 households across 32 major cities are interviewed during the first 20 days of each reference month, and results are published around the 5th of the following month. The survey uses a rotating panel design — each household stays in sample for four consecutive months, rests for eight, then returns for four more — which smooths out idiosyncratic response noise while capturing genuine shifts in sentiment. Because confidence data arrive before most hard activity indicators for the same month, they provide an early read on whether household demand is strengthening or cooling.
Three composite confidence indices — general sentiment, housing appetite, and durables appetite — are extracted from the eight raw INEGI survey questions using Principal Component Analysis (PCA). PCA identifies the common variation within each question group, producing a single index that captures the dominant signal while filtering out question-specific noise. The general index draws on six broad economic outlook questions; the housing and durables indices each isolate spending appetite in categories most sensitive to interest rates and household balance sheets.
COMING SOON...
Updated: 2026-06-02 by Ignacio Crane
Key Takeaways
The May 2026 SPF survey shows the aggregate Concern Index at 2.96, reflecting a modest decline in sentiment. The May 2026 SPF survey shows the aggregate Concern Index at 2.96, corresponding to the 65th percentile. The index fell by 0.0141 from the previous month, suggesting a slight easing of concerns among economic forecasters. This decline, while modest, is indicative of a broader trend of stabilization after a period of heightened anxiety in earlier months.
Economists have identified public insecurity, US trade policy, and a lack of structural change as the primary growth constraints currently impeding progress. The key constraints currently cited include public insecurity at 9.6%, US trade policy at 6.4%, and a lack of structural change at 4.8%. Notably, public insecurity experienced the largest month-over-month increase of 1.00%, underscoring the persistent challenges that this issue poses for economic stability and growth.
The perceived probability of recession remains moderate among surveyed economists, reflecting a cautious outlook. The perceived probability of recession stands at 20.0%, placing it within the 68th percentile historically. This level of concern is subdued relative to historical norms, suggesting that while apprehensions exist, they are not at alarmingly high levels. The probability remains consistent with the previous quarter, indicating stability in the economic outlook despite underlying uncertainties.
According to forecasters, there is a consensus that the peso is currently overvalued, reflecting ongoing concerns about its exchange rate trajectory. FX expectations suggest that forecasters view the peso as overvalued, with current-month misalignment at +0.097. This perception of overvaluation persists across horizons, indicating a sustained skepticism about the currency's real value in the near term. Such sentiments could influence investor behavior and overall economic sentiment moving forward.
Banxico's Survey of Professional Forecasters (Encuesta sobre las Expectativas de los Especialistas en Economía del Sector Privado) polls roughly 40 groups of analysts from banks, financial institutions, consultancies, and research centers. Responses are collected during the second half of each reference month — typically between the 15th and 28th — and results are published on the first business day of the following month. Because respondents form their expectations before some end-of-month official data releases, the survey provides an early window into shifting professional sentiment on inflation, growth constraints, recession risk, and exchange rates, making it a valuable leading indicator for policymakers and market participants.
Updated: 2026-06-03 by Alexander Dentler
Key Takeaways
Mexican equity markets as of June 3, 2026, show excess returns at 0.2614, reflecting a notable upward trend amidst heightened market volatility. With data through June 3, 2026, realized volatility has risen to 0.0096, indicating a continued increase in market fluctuations. Recent observations reveal that excess returns have risen by 0.0507 compared to the previous month, contributing to a two-month upward streak. This increase in excess returns, now around the 90th percentile historically, signals an environment of rising investor interest and activity, which could impact future market dynamics significantly.
The decomposition shows that recent volatility has been primarily driven by US policy shocks and liquidity constraints. Recent volatility has been driven by significant contributions from US policy shocks and challenges within the real sector, highlighting persistent pressures on liquidity and financing conditions. The contributions suggest that external economic factors remain influential in shaping market dynamics, while internal structural difficulties also weigh heavily on investor sentiment. As these drivers persist, market participants should remain vigilant for potential shifts in policy that could further influence volatility.
Investor sentiment remains cautious amid rising policy uncertainty, with notable shifts in market dynamics. Investor sentiment reflects increased caution, as evidenced by elevated levels of economic policy uncertainty, currently dominating discussions. The latest readings indicate a coordinated narrative among market participants, with growing alarm regarding public security and its implications for economic stability. This backdrop of uncertainty is likely to continue influencing market behavior, suggesting that stakeholders should prepare for potential volatility as conditions evolve.
Volatility Measures
| Measure | May 2026 | Jun 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | 0.0283 | 0.1952 | +0.1669 | US Policy Shocks (+0.137) |
| Realized Volatility | 0.0093 | 0.0085 | -0.0008 | US Policy Shocks (-0.001) |
| Illiquidity (Amihud) | 94.5836 | 84.8524 | -9.7312 | US Policy Shocks (-9.520) |
Monthly averages. Top Driver = largest OLS category contribution to latest value.
Financial market returns, volatility, and liquidity signal investor sentiment and risk appetite. Excess returns over government bonds capture the risk premium investors demand for holding equities; wider spreads suggest higher perceived risk or stronger growth prospects. Realized volatility in a stock market index reflects uncertainty — sharp swings indicate fragile sentiment and raise the cost of capital. Illiquidity shows how trading volume and price impact interact: when liquidity dries up, small trades can move prices disproportionately, amplifying shocks. For monetary policy, these indicators matter because they shape funding costs, investment flows, and the broader transmission of rate decisions into financial conditions.
Volatility drivers are analyzed in two steps. First, Principal Component Analysis (PCA) groups the six SPF concern categories and investor sentiment indicators (AAII bull-bear spread, NAAIM exposure index) into thematic driver clusters that capture common variation. Second, an OLS regression decomposes recent volatility movements into contributions from each driver cluster, quantifying how much of the observed excess return and realized volatility is attributable to policy uncertainty, external sentiment, and domestic macro conditions. The decomposition is descriptive — it identifies contemporaneous associations, not causal effects.
Updated: 2026-06-03 by Alexander Dentler
Key Takeaways
Banxico's June 2026 credit release shows money market spreads tightening, signaling a cautious lending environment. Following the latest June lending data, rate premia indicate that funding spreads are narrowing, with the TIIE 28d and 91d rates at 0.26% and 0.30%, respectively. This tightening trend of -0.117% over the previous month underscores a strategic response to current economic conditions, as markets anticipate Banxico's forthcoming policy decisions. Such developments may reflect a cautious approach by lenders in an environment characterized by economic policy uncertainty and rising inflationary pressures.
Household mortgage rates remain elevated, impacting affordability for potential buyers. The total annual cost of mortgages, represented by the average CAT, stands at 14.0%, with a range that spans from 10.7% to 28.2%. This relatively high average, coupled with the prevailing policy rate, suggests that the pass-through effect from the policy rate to mortgage costs has not fully materialized, potentially limiting access to housing finance for many households.
Debt issuance patterns show a significant preference for fixed-rate financing among corporates. Corporate financing is increasingly tilted towards fixed-rate debt, which comprises 18.74% of total issuance, as firms seek to mitigate interest rate risk amid ongoing economic volatility. This preference indicates a strategic shift, as businesses aim to secure predictable financing costs in an uncertain environment, while the reliance on variable-rate instruments remains comparatively limited.
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.
