Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-05-30
The article discusses Mexico's trade balance for the week of May 25-29, highlighting key figures and trends. It also covers the latest GDP data from the United States, providing insights into economic performance. The analysis includes comments from economic experts regarding the implications of these figures for both countries. — El Economista, 30 May 2026. Read more
The Mexican peso experienced a decline on Friday, May 29, but managed to close with gains for the month. The article discusses the fluctuations in the exchange rate and highlights the overall performance of the peso in the monthly balance. — El Financiero, 29 May 2026. Read more
The Mexican peso fell against the dollar in the last trading session of May. However, it recorded a monthly gain overall. The article highlights the fluctuations in the exchange rate without providing specific figures. — El Economista, 29 May 2026. Read more
The article discusses the potential of investing in commemorative coins for the 2026 World Cup. These coins are seen as a viable investment alternative, appealing to collectors and investors alike. The piece highlights the significance of these coins in relation to the event and their potential value appreciation. — El Economista, 29 May 2026. Read more
The Mexican peso has depreciated against the US dollar, influenced by ongoing tensions in the Middle East. Despite this decline, the peso is on track to register a monthly gain. The article highlights the current economic climate and its impact on currency performance. — El Economista, 29 May 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
Mexico, US conclude first bilateral round of USMCA review talks — Google News, 30 May 2026. Read more
US, Mexico conclude first round of trade deal talks on autos, metals, security By Reuters — Google News, 29 May 2026. Read more
Trade Zone: Canada and Mexico’s American trade travails—in charts — Google News, 29 May 2026. Read more
USD/MXN Forecast June 2026: MXN Carry Trade Keeps USD Capped — Google News, 29 May 2026. Read more
Banxico Cuts Mexico 2026 GDP Forecast to 1.1% — Google News, 29 May 2026. Read more
Mexico is seeking to eliminate steel tariffs as part of the USMCA review — Google News, 29 May 2026. Read more
US, Mexico launch formal trade talks, haggle over automotive content rules By Reuters — Google News, 29 May 2026. Read more
Trade between Mexico and the European Union Hits a Record High in 2025 — Google News, 29 May 2026. Read more
Behind Mexico's low unemployment rate, a surge in informal work and shrinking formal sector — Google News, 28 May 2026. Read more
Bank of Mexico lowers 2026 economic growth forecast to 1.1% — Google News, 28 May 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: 2026-05-30 by Alexander Dentler
Key Takeaways
With recent updates to economic indicators, our model-based expectations indicate a substantial chance of no action at the upcoming Banxico meeting on February 5, 2026. Markets are currently pricing in about 58% probability that Banxico will hold the policy rate steady, a sentiment underscored by heightened economic policy uncertainty and cooling consumer confidence, despite the persistent pressures from inflation. This outlook reflects a slight shift from our previous expectations, where the modal bucket indicated a more pronounced inclination towards a rate cut. The current model points toward likely inaction, with the modal bin firmly at ±0bp and a notable alternative probability for a -25bp cut at approximately 39%.
In our latest data refresh, we observed significant updates in key economic indicators, particularly inflation and economic policy uncertainty. The most recent consumer price index data showed inflation stabilizing, while economic policy uncertainty continued to rise, contributing to a complex backdrop for monetary policy considerations. These updates are crucial as they provide context for the challenges facing the central bank.
The interplay of various economic drivers remains pivotal, with inflationary pressures and policy uncertainty exerting contrasting influences on monetary policy. Moderate dovish pull is evident from the rising economic policy uncertainty, which is counterbalanced by persistent inflationary pressures that suggest a cautious approach may be warranted. Notably, the strength of stock market performance serves as a positive driver, while the ongoing public security issues represent a significant negative influence. Ultimately, while the model's insights are valuable, the actual decision will hinge 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: 2026-05-30 by Alexander Dentler
Key Takeaways
As of May 30, 2026, bond prices indicate a notable shift in the yield curve with the 10Y-3Y nominal spread at 1.53%, reflecting a rise of 0.30% from the previous observation. The latest yield curve data reveals that the nominal 10Y-3Y spread is currently at 1.53%, while the real spread stands at 0.40%. This change suggests a stable environment, as the curve remains normal without inversion, with the inflation spread indicating a robust implied inflation expectation of 1.13%. This level of the breakeven inflation spread implies that market participants are pricing in moderate inflationary pressures, which may influence future monetary policy decisions.
The curve shape suggests a cautious market outlook, aligning with broader policy expectations. Markets appear to be pricing in an 85% probability that Banxico will maintain the policy rate at its upcoming meeting, reflecting a slight dovish tilt amidst ongoing economic uncertainties. This sentiment is in line with the current yield curve dynamics, which do not exhibit signs of inversion, indicating that market participants foresee stability rather than aggressive rate changes. However, the interplay between persistent inflation and economic policy uncertainty underscores the delicate balance policymakers must navigate.
Yield Spread Update
| Spread (10Y−3Y) | 28 May | 29 May 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.53 | 1.53 | -0.005 | 1.02 |
| Real | 0.39 | 0.40 | +0.003 | 0.73 |
| Inflation | 1.14 | 1.13 | -0.009 | 0.29 |
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: 2026-05-05 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: 2026-05-30 by Alexander Dentler
Key Takeaways
Mexican equity markets as of May 30, 2026, show excess returns at 0.2614, accompanied by realized volatility at 0.0096, indicating a heightened risk environment. With data through May 30, 2026, Mexican equity markets show excess returns at 0.2614, reflecting a notable increase in market activity. Realized volatility has also risen, currently at 0.0096, suggesting that investors are navigating a complex backdrop of economic uncertainty. The recent upward trend in excess returns is particularly noteworthy, as it signifies a potential shift in market sentiment. This increase in volatility aligns with broader concerns regarding economic policy and public security, highlighting the interplay between market dynamics and socio-political factors.
The decomposition shows that recent volatility has been driven primarily by US policy shocks and liquidity constraints. Recent volatility has been driven by a confluence of factors, with US policy shocks and liquidity constraints emerging as the most significant contributors. These elements have added layers of complexity to the market, as investors adjust their positions in response to changing external conditions. Notably, the presence of real-sector difficulties further exacerbates this environment, indicating that the market remains sensitive to both domestic and international pressures.
Investor sentiment remains cautious, with policy uncertainty levels reflecting broader economic concerns. Investor sentiment, as gauged by various measures of market psychology, remains cautious amid rising economic policy uncertainty, which currently sits at 102.12. This reflects a growing apprehension among market participants regarding the stability of the economic landscape, particularly in light of ongoing discussions around public security and structural deficiencies. As these concerns permeate the discourse, they may influence future market behavior and investment strategies.
Volatility Measures
| Measure | Apr 2026 | May 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.0811 | 0.0283 | +0.1094 | US Policy Shocks (+0.137) |
| Realized Volatility | 0.0095 | 0.0093 | -0.0002 | US Policy Shocks (-0.001) |
| Illiquidity (Amihud) | 108.9576 | 94.5836 | -14.3741 | US Policy Shocks (-9.514) |
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: 2026-05-30 by Alexander Dentler
Key Takeaways
Banxico's latest credit release for May 2026 highlights a tightening trend in money market spreads, signaling a cautious lending environment. Following the latest May lending data, rate premia indicate that money market spreads are currently at 0.19%, significantly lower than the policy rate. This represents a narrowing of -0.077 since the previous month, reflecting a more conservative stance among lenders amid persistent inflationary pressures. Such dynamics are crucial for fund managers and policymakers as they navigate the implications for credit availability and borrowing costs in the broader economy.
Household mortgage rates have seen notable developments, with the average total annual cost (CAT) now standing at 14.0%. The mortgage CAT ranges from a minimum of 10.7% to a maximum of 28.2%, indicating a considerable variance in affordability across different borrower profiles. This range suggests that while some consumers may find access to financing manageable, others may face significant challenges, especially in a landscape where the policy rate remains uncertain.
Debt issuance patterns reveal a significant balance in financing methods, with a predominance of fixed-rate instruments. Currently, fixed-rate debt constitutes 18.74% of the total issuance, while variable rates account for 19.92%. This composition indicates a cautious shift among firms towards fixed-rate financing, likely as a hedge against potential interest rate increases, reflecting a broader trend of risk aversion in the current economic climate.
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.
