Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-06-26
The World Cup has led to a surge in betting activities, which is putting stress on the SPEI system. This increase in transactions is affecting the speed of money transfers, as the system struggles to handle the heightened demand during the tournament. — El Economista, 26 Jun 2026. Read more
Victoria Rodríguez Ceja, Governor of Banxico, expressed concerns about the delicate balance of the Mexican economy. She highlighted the ongoing weaknesses and emphasized the need for careful monitoring of economic indicators. The statement reflects the central bank's cautious stance amid current economic challenges. — El Financiero, 26 Jun 2026. Read more
The Bolsa Mexicana de Valores closed with gains, breaking a negative streak. This positive performance comes after a series of declines, signaling a potential shift in market sentiment. Investors reacted favorably to recent developments, contributing to the upward movement in stock prices. — El Economista, 25 Jun 2026. Read more
US inflation surged to 4.1% in May, marking its highest level since 2023. The increase is attributed to the ongoing conflict in Iran, which has impacted economic conditions. This rise in inflation raises concerns about the economic outlook and potential responses from policymakers. — El Financiero, 25 Jun 2026. Read more
The Mexican peso has broken its negative streak and gained ground against the US dollar following the release of inflation data in the United States. This shift reflects market reactions to the economic indicators, which have influenced currency valuations. The article highlights the impact of these developments on the peso's performance in the foreign exchange market. — El Economista, 25 Jun 2026. Read more
The article discusses the recent decline in the Nasdaq and S&P 500 indices, primarily driven by losses in technology stocks. It highlights the impact of these losses on market sentiment and investor confidence, noting that major tech companies have faced significant sell-offs. — El Economista, 26 Jun 2026. Read more
Banamex has introduced a new policy allowing customers to pay annual fees for 13 credit cards in monthly installments. This move aims to enhance customer accessibility and ease the financial burden associated with credit card fees. — Expansión, 25 Jun 2026. Read more
In a recent discussion, Banxico Governor Victoria Rodríguez Ceja emphasized the importance of maintaining economic stability. She highlighted the need for coordinated policies between the central bank and the government to address current challenges. The conversation also touched on the role of inflation and interest rates in shaping Mexico's economic future. — El Financiero, 25 Jun 2026. Read more
New home sales in the United States fell unexpectedly in May, indicating a potential slowdown in the housing market. This decline has raised concerns among economists about the future trajectory of the housing sector. The report highlights the challenges facing buyers amid rising interest rates and economic uncertainty. — El Economista, 24 Jun 2026. Read more
Inflation in Mexico decreased to 3.55% during the first half of June, despite the commencement of the World Cup. This decline reflects ongoing economic trends and is a significant development in the country's financial landscape. — Expansión, 24 Jun 2026. Read more
Mexico’s central bank holds interest rate at 6.50% while inflation continues to decline — Google News, 25 Jun 2026. Read more
Mexico's Central Bank Holds Firm: Interest Rate Steady Amid Cooling Inflation — Google News, 25 Jun 2026. Read more
Banxico Holds Key Rate At 6.50% As Expected, Citing Sticky Core Inflation — Google News, 25 Jun 2026. Read more
Banxico Holds Rate Steady At 6.50% As Inflation Concerns Persist — Google News, 25 Jun 2026. Read more
Bank of Mexico Leaves Benchmark Interest Rate Unchanged — Google News, 25 Jun 2026. Read more
Mexico's Central Bank Freezes Rate at 6.50% to Curb Inflation Risks — Google News, 25 Jun 2026. Read more
Mexico Banxico Interest Rate Decision in line with forecasts (6.5%) — Google News, 25 Jun 2026. Read more
Mexico Weekly Economic Brief: Trade Expansion, Innovation — Google News, 25 Jun 2026. Read more
Unemployment in Mexico rises in May to 2.8% after increasing three tenths — Google News, 25 Jun 2026. Read more
Mexico Unemployment Rate Rises to 8-Month High — Google News, 25 Jun 2026. Read more
Updated: 2026-06-26 by Alexander Dentler
Key Takeaways
Following the May 7, 2026 decision, Banxico's policy rate stands at 6.50%, reflecting a cautious approach in the face of persistent inflationary pressures and geopolitical uncertainties. After Banxico's May 7 meeting, the target rate remains at 6.50%, following a recent decrease of 0.25%. The last rate change was a cut, which adds to the cumulative easing trend since the last increase in March 2023. This decision reflects the committee's recognition of inflationary dynamics and economic stability concerns, establishing a cautious yet adaptive policy stance as they approach the next meeting in 41 days.
Relative to the United States, the Fed's target rate currently stands at 3.62%, creating a rate differential of 2.88% in favor of Mexico. The Fed's target rate is currently at 3.62%, which highlights a significant divergence from Banxico's rate of 6.50%. This 2.88% differential presents a unique dynamic in capital flow considerations, as Mexico's higher rates may attract foreign investment seeking better returns. Moreover, the differing approaches reflect the Fed's more cautious stance while Banxico navigates through its own set of economic challenges, including inflationary pressures and structural concerns.
The rate differential creates a complex landscape for capital flows and market stability in Mexico. The rate differential between Mexico and the U.S. potentially encourages capital inflows, as investors seek higher returns in a relatively stable monetary environment. However, the backdrop of economic policy uncertainty and security concerns could pose challenges to this dynamic. Hence, how Banxico communicates its future policy direction will be critical in managing both market sentiment and economic stability.
The central bank's policy rate is the primary tool for steering inflation and economic activity. Banxico targets 3% annual inflation and adjusts its overnight interbank rate to influence borrowing costs throughout the economy. The rate differential with the United States affects capital flows and exchange rate dynamics — a wider spread can attract foreign investment but may constrain domestic credit. Policy decisions are announced roughly every six weeks following scheduled monetary policy meetings.
Updated: 2026-06-26 by Alexander Dentler
Key Takeaways
With the latest updates reflecting shifts in the modal bin and prevailing economic conditions, our model suggests a substantial chance of no action at Banxico's upcoming meeting on February 5, 2026. The expected change in policy rate is currently positioned at around -11bp, a notable adjustment from previous assessments. The modal bucket indicates a 58% probability of maintaining the current rate, while a 38.9% chance points toward a modest cut. This represents a material swing towards the hold position since the last update. Current model-based expectations indicate that market participants are pricing in an 80% probability that Banxico will hold its policy rate steady, reflecting a cautious balancing act amid ongoing economic dynamics. This high likelihood of inaction is underpinned by persistent inflation concerns, particularly in light of geopolitical tensions affecting price stability. Moreover, the labor market appears to be cooling, suggesting some easing of inflationary pressures, which adds complexity to policymakers' considerations as they weigh the potential need for further action.
The latest data refresh has revealed material insights into key economic indicators, particularly inflation and credit spreads. Inflation remains a critical area of focus, with recent figures continuing to signal pressures that warrant the committee's attention. Additionally, credit spreads have tightened, which may exert slight dovish pull on policy considerations. Overall, the data landscape remains consistent with previous assessments, maintaining a solid foundation for ongoing analysis.
In terms of influential drivers, persistent inflation is exerting moderate hawkish pressure, while geopolitical tensions continue to loom as significant risks. The most notable positive driver is the observed cooling in the labor market, which could contribute to easing inflationary pressures, while the ongoing concerns surrounding public security and economic policy uncertainty pose considerable risks to overall economic stability. As such, the influence of these driver variables is noteworthy, though some indicators remain economically negligible at this time. Ultimately, the decision will hinge not solely on model mechanics, but also on the committee's interpretation of the evolving economic landscape.
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: 2026-06-26 by Alexander Dentler
Key Takeaways
Bond prices as of 2026-06-26 show the 10Y-3Y spread at 1.29%, indicating a stable nominal spread with a recent decline of 0.14%. The latest yield curve data reveals that the nominal 10Y-3Y spread is currently at 1.29%, reflecting a slight decrease from the previous observation. In contrast, the real spread stands at 0.57%, suggesting that inflation-adjusted yields are maintaining a healthy level. This configuration, alongside an implied inflation spread of 0.72%, indicates that market participants are relatively optimistic about future inflation expectations, albeit with caution given ongoing economic signals.
The curve shape suggests a market expectation of stable policy rates in the near term. Markets appear to be pricing in an 80% probability that Banxico will hold its policy rate steady at the next meeting, a sentiment that aligns with the current yield curve's structure. This stability reflects the balancing act faced by policymakers amid persistent inflation concerns, yet it does not seem to fully account for the structural risks highlighted by economists. Therefore, while the nominal spread implies a cautious optimism, there remains a palpable tension as the committee navigates these mixed signals.
Yield Spread Update
| Spread (10Y−3Y) | 24 Jun | 25 Jun 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.27 | 1.29 | +0.021 | 1.31 |
| Real | 0.55 | 0.57 | +0.015 | 1.05 |
| Inflation | 0.71 | 0.72 | +0.006 | 0.26 |
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: 2026-06-25 by María López
Key Takeaways
The mid-June 2026 CPI release shows headline inflation at 3.58%, landing within Banxico's target band yet revealing a downward trend. The mid-June 2026 CPI release shows headline inflation at 3.58%, around the 29th percentile, and comfortably within Banxico's 2%-4% target band. This rate marks a decrease of 0.10 from the previous release, continuing a six-month streak of declining growth. While the current figure indicates some relief for consumers, it also highlights that inflation dynamics are still at play, with pressures likely lingering beneath the surface.
Core inflation, which excludes volatile food and energy prices, remains higher than headline figures, suggesting persistent underlying price pressures. Core inflation, which excludes volatile components, is currently at 4.21%, sitting in the 67th percentile. This marks a slight decrease of 0.01 compared to the last reading, indicating a divergence from the headline rate. The core figure is still above the 3% target, reflecting that while headline inflation shows signs of easing, the underlying inflationary pressures remain a concern for policymakers, necessitating careful monitoring.
Trade prices reveal a stark contrast, with export prices surging while import prices stabilize, indicating complex global market interactions. Trade prices are experiencing significant movements, particularly with export prices soaring to 15.25%, placing them in the 93rd percentile. This reflects a 0.12 increase from last month and underscores the strong international demand dynamics, which can impact domestic inflation. Meanwhile, import prices are up at 4.41%, indicating that while imports are becoming pricier, they are not rising as sharply as exports, complicating the inflation narrative further.
| 1H Jun 2026 | 1H Jun 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 3.6 | — | — | 4.7 | 4.7 | +0.00 |
| Core CPI | 4.2 | — | — | 4.2 | 4.2 | +0.00 |
| Export Price Index | — | — | — | 4.9 | 4.9 | +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 69 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 69 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 1.09 vs 1.03 naive, n=69); Core CPI (RMSE 0.65 vs 1.07 naive, +39% improvement, n=69); Export Price Inflation (RMSE 7.27 vs 7.77 naive, +6% improvement, n=56); Import Price Inflation (RMSE 2.99 vs 2.05 naive, n=56).
Updated: 2026-06-26 by Alexander Dentler
Key Takeaways
The recent update from the SHF House Price Index reveals significant insights into the state of the housing market, particularly with the new observation of 8.71% YoY inflation as of 2026-01-01. This level of house price inflation exceeds historical averages, positioning itself in the 75th percentile since 2006. In comparison, headline CPI inflation stands at 3.94% while housing CPI inflation is at 3.61%, suggesting that house prices are rising notably faster than general inflation metrics. This divergence reflects the ongoing demand pressures in the housing sector, despite a slight decline of 0.21 percentage points from the previous quarter.
The DFM nowcast provides valuable context, estimating house price inflation at 8.65% YoY as of 2026-05-01. This nowcast aligns closely with the latest observed value, indicating that auxiliary indicators such as mortgage lending and housing CPI are confirming the current trajectory rather than suggesting any significant upward or downward pressure. The model's consistency with observed data suggests that the dynamics within the housing market remain robust and supportive of sustained inflationary trends.
DFM Nowcast Comparison
| Observed | Nowcast | Prev. Nowcast | Gap | Revision | |
|---|---|---|---|---|---|
| SHF House Price Inflation (YoY) | 8.71% | 8.65% | 8.65% | -0.06 | +0.00 |
Observed: 2026-Q1. Nowcast: 2026-05. Previous nowcast: 2026-05. "Gap" = nowcast − observed. "Revision" = change in nowcast since previous run.
The SHF House Price Index is published quarterly by Sociedad Hipotecaria Federal, Mexico's federal mortgage development bank, typically around 40 days after the reference quarter ends. It is constructed from mortgage appraisal data (avalúos) using a Case-Shiller repeat-sales methodology, with breakdowns by state, new vs. used housing, and market segment (affordable vs. mid-to-high-end). Because the index reflects prices at the point of mortgage origination, it captures credit-driven demand rather than asking prices, making it a tighter gauge of actual transaction values and collateral quality across the housing market.
A Dynamic Factor Model (DFM) filters the quarterly SHF House Price Index using five Banxico auxiliary series — the funding rate, mortgage lending volumes, a housing purchase survey indicator, the SPF unemployment forecast, and construction activity — plus two CPI components (headline and housing subcategory). The model extracts a common factor from these seven indicators, producing a smoothed nowcast that updates between quarterly SHF releases whenever auxiliary data arrive. This filtered estimate helps distinguish persistent trends from quarterly noise in the observed house price series.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. House Price Nowcast (RMSE 1.32 vs 0.66 naive, n=12).
Updated: 2026-06-06 by María López
Key Takeaways
Brent oil prices just jumped to $106.30 as of May 2026, reflecting a staggering YoY increase of 65.8%. Brent oil prices through May 2026 show a notable rise, landing at $106.30. This marks a significant YoY change of +65.8%, and the momentum is clearly up, with prices climbing in recent days. For Mexico, where oil is a major export and accounts for about 15% of federal revenue, these figures are crucial — they could bolster government finances and Pemex operations.
Copper prices are hitting $13,483.75, up 41.5% YoY as of May 2026. With copper data updated to May 2026, the current price stands at $13,483.75, showcasing a robust YoY increase of 41.5%. The trend remains upward, indicating strong demand in the global market. Given that Sonora dominates copper production in Mexico, this surge could enhance regional economic activity, despite the sector's small employment footprint.
Corn prices are at $215.62, reflecting a modest YoY increase of 5.3%. As of May 2026, corn prices reached $215.62, showing a slight YoY rise of 5.3%. The trend appears stable, neither soaring nor plummeting significantly. This is particularly relevant for Mexico, where corn is a staple for many, and price stability is key for the 1.5 million smallholder farmers dependent on this crop.
Commodity prices feed directly into Mexico's inflation pulse and terms of trade. Oil and corn affect energy and food costs, while copper is a proxy for global industrial demand. For policymakers, sharp commodity swings can shift inflation expectations and fiscal balances, making these prices critical to monitor.
Updated: 2026-06-24 by Ignacio Crane
Key Takeaways
The April 2026 IMSS release shows unit labor costs at 3.34%, indicating that wages are growing faster than productivity. Following April's formal sector wage data, ULC in manufacturing is rising, reflecting a modest deceleration in productivity gains. The growth rate increased by 0.47, positioning it in the 79th percentile historically. This suggests potential cost-push inflation pressures that could affect the competitiveness of the manufacturing sector moving forward.
Real wages in the formal sector rose to 4.49%, signifying an improvement in purchasing power for workers. This increase in real wages indicates positive gains for households, enhancing their ability to sustain consumption amid rising costs. While the overall trend is encouraging, it is essential to acknowledge that the year-over-year growth has diminished slightly by 1.7%, which could temper expectations for sustained gains.
Across sectors, a notable divergence emerges as retail outperforms manufacturing in real wage growth. Retail real wages have grown at a commendable 4.49%, contrasting sharply with manufacturing's 3.12%. This divergence underscores the contrasting dynamics within the labor market, where retail workers are benefitting more significantly from wage increases, while manufacturing remains constrained by rising labor costs.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 0.3 | 0.3 | +0.00 |
| ULC Retail | — | — | — | 1.4 | 1.4 | +0.00 |
| Real Wage Mfg | — | — | — | 3.0 | 3.0 | +0.00 |
| Real Wage Retail | — | — | — | 4.3 | 4.3 | +0.00 |
All values in % (MoM, seasonally adjusted). "Error" = actual − previous forecast. "Revision" = change in 12-month outlook. "—" = no prior forecast available.
Unit labor costs (ULC) measure the average cost of labor per unit of output — when wages grow faster than productivity, ULC rises, potentially squeezing profit margins and fueling inflation. In Mexico, where the formal sector employs roughly half the workforce, IMSS-registered wage data captures trends in the formal economy but misses the informal sector's dynamics. Real wages — nominal wages adjusted for inflation — determine household purchasing power and underpin consumer demand. For policymakers, these indicators help balance inflation control, competitiveness, and the economic welfare of Mexican workers.
Twelve-month-ahead forecasts for unit labor costs and real wages in manufacturing and retail are produced using a Seasonal Autoregressive Integrated Moving Average with eXogenous inputs (SARIMAX) model. The model is estimated on seasonally adjusted month-over-month percentage changes, with all four series — ULC manufacturing, ULC retail, real wage manufacturing, and real wage retail — entering as joint endogenous variables. No external auxiliary data feed the forecast; the model relies solely on the internal dynamics and cross-series interactions of the wage and productivity data. Forecast confidence intervals widen over the projection horizon.
Out-of-sample backtest over 24 evaluation windows using the SARIMAX. Out-of-sample backtest over 24 evaluation windows using the SARIMAX. RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. ULC Manufacturing (RMSE 2.97 vs 3.21 naive, +7% improvement, n=24); ULC Retail (RMSE 5.33 vs 5.22 naive, n=23); Real Wage Manufacturing (RMSE 2.20 vs 2.62 naive, +16% improvement, n=24); Real Wage Retail (RMSE 3.05 vs 2.97 naive, n=23).
Updated: 2026-06-19 by Pablo Rivas
Key Takeaways
Following the recent updates in key economic indicators, real GDP growth in Mexico is now estimated at 4.96%, reflecting a robust upward revision of 2.66%. The latest quarterly GDP release from INEGI shows a marked increase in growth expectations, signaling a healthier economic outlook. This adjustment highlights a strong recovery trajectory, likely driven by resilient domestic consumption and improved industrial performance. As we advance into Q1 2026, this optimistic figure may bolster confidence among investors and policymakers alike.
Private consumption continues to be a key driver of growth. Household spending is estimated to have soared to 8.09%, significantly outpacing GDP growth. This robust expansion suggests that consumers are confident and willing to spend, providing essential support to overall economic activity. Such vigor in private consumption is a positive sign, signaling a thriving domestic market that can help buffer against external shocks.
Exports are struggling to keep up with domestic demand. External demand remains tepid, with export growth now at a mere 0.58%. This lackluster performance raises concerns about Mexico's competitiveness in the global market, especially as trading partners navigate their own economic uncertainties. The soft export figures could hint at challenges ahead for sectors reliant on international trade, potentially dampening the overall growth outlook.
Imports are indicating a shift in domestic absorption patterns. Imports have contracted to 1.56%, reflecting a 3.81% decline from previous estimates. This downturn signals a potential cooling in domestic demand, as consumers and businesses may be becoming more cautious in their spending habits. The drop in imports could also suggest that the economy is adjusting to current market conditions, though it may raise questions about future growth sustainability.
Net trade dynamics appear to be shifting. The trade balance contribution remains a mixed bag, as the decline in imports coupled with stagnant export growth presents a complex scenario. While fewer imports can ease some pressure on the trade deficit, the sluggish export performance raises flags about Mexico's economic resilience in a challenging global landscape. Policymakers will need to monitor these trends closely to ensure balanced and sustainable growth.
DFM GDP Nowcasts
| Component | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Real Gross Domestic Product | 6.19% | 4.96% | 4.96% | +0.00 |
| Private Consumption | 0.15% | 8.09% | 8.09% | +0.00 |
| Imports | 25.37% | 1.56% | 1.56% | +0.00 |
| Exports | 0.58% | 0.58% | 0.58% | +0.00 |
QoQ annualized, seasonally adjusted. Nowcast = DFM filtered estimate using higher-frequency inputs. "Revision" = change from previous run.
Real activity data tracks the economy's engine — output, spending, and trade — while nowcasts bridge the lag between releases. Real GDP captures total production; private consumption reflects household demand; exports and imports reveal external demand and the flow of inputs for Mexico's trade-exposed, manufacturing-heavy economy. Shifts in U.S. demand, global prices, and the peso often show up first in trade, then filter into GDP and consumption. Because official series arrive with delays and revisions, model-based nowcasts provide an early, probabilistic read for policy timing — useful if treated with uncertainty bands and cross-checked against higher-frequency signals.
A Dynamic Factor Model (DFM) nowcasts quarterly GDP and its demand components — private consumption, imports, and exports — using 14 higher-frequency inputs. These include monthly employment indicators, industrial production (IGAE), consumer confidence, capacity utilization, retail sales, and private consumption, plus quarterly GDP sector breakdowns. The model extracts common factors via the Kalman filter, updating the nowcast each time any input series receives new data. Nowcast estimates are conditional expectations that narrow as more data arrive within each quarter.
Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 12 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Real GDP (RMSE 3.90 vs 3.82 naive, n=12); Private Consumption (RMSE 5.41 vs 2.51 naive, n=12); Exports (RMSE 22.26 vs 18.28 naive, n=12); Imports (RMSE 11.34 vs 17.09 naive, +34% improvement, n=12).
Updated: 2026-06-19 by Pablo Rivas
Key Takeaways
The latest ENOE survey for April 2026 shows unemployment at a record high of 3.44%, unchanged from the previous month. The latest ENOE survey for April 2026 shows unemployment at 3.44%, around the 100th percentile and a record high. This figure has remained stable compared to last month, indicating an unusual lack of movement in a typically dynamic labor market. The stagnation at such a high level raises questions about employment opportunities and economic resilience as we head into the latter half of the year.
By gender, the unemployment rates illustrate a nuanced picture of the labor market. Male and female unemployment rates are currently at 3.35% and 3.51%, respectively, with males slightly faring better. The gap between genders remains tight, but the male unemployment rate has seen a recent uptick, suggesting that the pressures of the current economic climate are impacting men slightly more than women at this moment.
The share of informal workers continues to climb, signaling potential vulnerabilities in job security. Informal employment has risen to 55.7%, reflecting a concerning trend that indicates more workers are turning to less stable jobs. This increase in informality could be a response to the high unemployment rate, as individuals seek any available work, albeit without the protections afforded to formal employment. Such a shift raises alarms about the long-term stability of the labor market and the broader economy.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q2 2026) | Nowcast (Q2 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.56% | 3.44% | — | — |
| Underemployment Rate | 10.28% | 12.17% | — | — |
| Male Unemployment | 2.45% | 3.35% | — | — |
| Female Unemployment | 2.71% | 3.51% | — | — |
Observed = latest quarterly ENOE value. Nowcast = DFM filtered estimate using monthly auxiliary data. "Revision" = change from previous run.
Labor slack and its composition shape inflation pressure, policy timing, and social risk. Unemployment, underemployment, and unemployment by gender reveal how broad and uneven slack is. In Mexico's large informal sector, the informal employment share can swing sharply — often contracting faster in downturns as unprotected jobs are cut first, then rebounding early — masking true slack if headline unemployment alone is tracked. Tracking these dimensions helps distinguish cyclical slack from structural mismatches and calibrate monetary policy accordingly.
Between quarterly ENOE survey releases, a Dynamic Factor Model (DFM) nowcasts employment indicators using higher-frequency auxiliary data. The model ingests monthly series — industrial production, consumer confidence, capacity utilization, retail sales, and private consumption — alongside quarterly GDP components to extract common factors that track the business cycle. When any auxiliary series receives new data, the Kalman filter updates the nowcast, providing an early signal before the next official employment release.
Out-of-sample backtest over 20 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 20 evaluation windows using the Dynamic Factor Model (DFM). RMSE measures the typical forecast error in the same units as the series; 'naive' is a no-change benchmark. Unemployment (RMSE 22.27 vs 0.13 naive, n=17); Underemployment (RMSE 1.26 vs 0.50 naive, n=11); Male Unemployment (RMSE 0.44 vs 0.26 naive, n=11); Female Unemployment (RMSE 0.44 vs 0.28 naive, n=11).
Updated: 2026-06-12 by María López
Key Takeaways
INEGI's Q2 2026 productivity release shows secondary sector output at 102, reflecting a solid 2.13% increase from the previous month. The latest INEGI productivity data for Q2 2026, released on June 12, reveals that secondary sector output is holding strong, driven by notable gains in construction and manufacturing. This growth is broad-based, with the construction sector leading the charge, signaling resilience against inflationary pressures. Meanwhile, mining lags behind, indicating potential instability in that subsector.
Manufacturing composites show a mixed bag of trends, highlighting sustainability concerns. Across the PCA indices, productivity dipped slightly while sales and inventory dynamics suggest a tightening labor market. The divergence in labor demand—currently at a low of -1.49—raises red flags about future growth potential, especially as rising inventory levels could indicate overproduction risks.
Within manufacturing, construction shines while the chemical industry struggles. The top-performing subsectors include construction, which is at the 99th percentile, showing a whopping 7.76% increase, while the chemical industry underperforms in the 21st percentile, down 7.74%. The robust construction output significantly bolsters the overall manufacturing index, but the decline in chemicals underscores the volatility and challenges facing specific industries.
PCA Composite Indices
| Index | May 2025 | Jun 2025 | Δ |
|---|---|---|---|
| Productivity Index | 0.50 | 0.28 | -0.22 |
| Sales Index | 0.58 | 0.61 | +0.03 |
| Inventory Index | 0.15 | -0.03 | -0.18 |
| Labor Demand Index | -1.32 | -1.49 | -0.17 |
Standardized scores (0 = mean, ±1 = one standard deviation).
Productivity trends reveal the economy's capacity to grow without stoking inflation. In Mexico, productivity in the secondary sector — mining, energy, construction, and especially manufacturing — signals how efficiently output expands relative to inputs. Strong productivity gains mean firms can meet demand without raising prices, easing inflation pressure and supporting sustainable wage growth. Weak productivity, by contrast, constrains supply, making cost shocks more inflationary. Manufacturing deserves closer scrutiny, as its diverse subsectors respond differently to global demand, exchange rate shifts, and investment cycles. Tracking these patterns helps judge whether growth is supported by efficiency gains or reliant on credit and labor cost increases.
Four composite indices — productivity, sales, inventory, and labor demand — are constructed using Principal Component Analysis (PCA) applied to INEGI manufacturing subsector data and GDP sector composition. PCA extracts the dominant co-movement pattern across subsectors, producing standardized indices that summarize broad trends while filtering out subsector-specific noise. The productivity index draws on output-per-worker measures across manufacturing branches; the sales, inventory, and labor demand indices use INEGI's corresponding survey-based indicators supplemented by GDP sector weights.
Updated: 2026-06-05 by María López
INEGI's latest May release reveals confidence at an elevated level of 1.04, but that's down from last month, signaling a notable dip in consumer sentiment. The May 2026 consumer confidence survey shows the general index at 1.04, placing it in the 81st percentile—still elevated, but it fell by 0.19 compared to April. This decline signals growing unease among consumers, with the housing-specific index suffering a sharper drop of 0.37, reflecting mounting concerns in that sector. While durable goods confidence remains robust at 1.02, up slightly, the divergence highlights that housing sentiment is dragging down the overall picture. With such a significant gap, it’s clear consumers are more hesitant about housing investments amid ongoing economic uncertainties.
PCA Confidence Indices
| Index | Apr 2026 | May 2026 | Δ |
|---|---|---|---|
| General Sentiment | 1.22 | 1.04 | -0.19 |
| Housing Appetite | 0.69 | 0.32 | -0.37 |
| Durables Appetite | 0.94 | 1.02 | +0.08 |
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: 2026-06-26 by Alexander Dentler
Key Takeaways
With data through June 26, 2026, Mexican equity markets show excess returns at -0.2169, reflecting increased market volatility driven by a confluence of macroeconomic factors. Mexican equity markets as of June 26, 2026, show excess returns at -0.2169, indicating a notable decline in performance. Realized volatility, measured by the Parkinson index, stands at 0.0122, which suggests a heightened level of uncertainty in the market. The recent revisions to key metrics highlight a shift in sentiment, with the risk-return ratio adjusted from -0.22 to -0.12, signaling a more cautious outlook among investors. The ongoing geopolitical tensions and inflationary concerns have contributed to these fluctuations, marking a critical juncture for market participants.
Recent volatility has been driven by substantial contributions from US policy shocks and liquidity conditions, which have shaped investor behavior. The decomposition shows that recent volatility has been primarily influenced by US policy shocks and liquidity dynamics, which have exerted pressure on market stability. Additionally, the contributions from real-sector difficulties have persisted, indicating underlying economic challenges that could further complicate the outlook. The interplay of these factors suggests that while short-term market movements may reflect immediate responses to external pressures, the longer-term trajectory remains uncertain as these drivers continue to evolve.
Investor sentiment remains cautious amid rising policy uncertainty, with implications for market dynamics and economic outlook. Investor sentiment, as reflected in various surveys, indicates a cautious approach among market participants, with growing concerns over economic policy uncertainty. The AAII sentiment index and NAAIM exposure levels reveal a retreat from bullish positions, signifying apprehension about the efficacy of current economic strategies. This sentiment, coupled with the ongoing discussions surrounding public security and economic stability, paints a complex picture of the market landscape that policymakers will need to navigate carefully.
Volatility Measures
| Measure | May 2026 | Jun 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | 0.0283 | -0.1155 | -0.1438 | US Policy Shocks (+0.127) |
| Realized Volatility | 0.0093 | 0.0097 | +0.0004 | Liquidity and Financing (+0.001) |
| Illiquidity (Amihud) | 94.5836 | 94.5994 | +0.0159 | Real-Sector Difficulties (-14.261) |
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: 2026-06-26 by Alexander Dentler
Key Takeaways
Banxico's June 2026 credit release shows money market spreads tightening, reflecting a cautious market response to the evolving economic landscape. Following the latest June lending data, rate premia indicate that funding and TIIE spreads are presently at 0.25% and 0.29%, respectively, in relation to the policy rate. The latest month observed a narrowing of the spread by -0.0742, suggesting improved market conditions or a lower risk perception among lenders. This trend may enhance liquidity in the credit markets, potentially easing borrowing costs for the non-financial private sector.
Household mortgage rates reflect persistent cost pressures, posing challenges for affordability. The total annual cost of mortgages (CAT) averages 14% with a range from 10.7% to 28.2%. This high cost underscores the limited pass-through of the policy rate to retail mortgage rates, complicating affordability for potential borrowers. The ongoing pressures in the housing market may hinder consumer spending and overall economic momentum.
Debt issuance patterns reveal a preference for fixed-rate financing as firms navigate uncertain economic conditions. Debt issuance composition indicates that 19.47% of corporate financing is secured through fixed rates, while variable rates account for a combined 19.82%. This reflects a cautious approach among firms, opting for stability amid fluctuating economic signals. The shift towards fixed-rate instruments suggests a strategic move to mitigate risks associated with potential interest rate volatility.
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.
