Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-05-29
Mexico's tax revenue has fallen for the first time in five years, coming in below projections. This decline raises concerns about the country's fiscal health and the effectiveness of current economic policies. The article highlights the implications of this drop on government funding and future budget planning. — El Economista, 29 May 2026. Read more
The Mexican peso has appreciated against the US dollar following reports of a preliminary agreement between the United States and Iran. This development has positively influenced market sentiment, contributing to the peso's gains. Analysts suggest that the potential easing of tensions may have a favorable impact on the Mexican economy. — El Economista, 28 May 2026. Read more
The European Union and Iran have reached an agreement to extend the ceasefire for an additional 60 days. However, the extension is contingent upon receiving approval from President Trump. — El Financiero, 28 May 2026. Read more
The dollar has decreased in value against the Mexican peso as market operators assess inflation trends in the United States. This shift comes as traders closely monitor economic indicators and their potential impact on currency exchange rates. The article discusses the implications of these developments for both the US and Mexican economies. — El Financiero, 28 May 2026. Read more
The article discusses the recent changes to the Special Tax on Production and Services (IEPS) affecting cigarettes and soft drinks in Mexico. It explains that the tax adjustments will not significantly impact consumers' finances for the remainder of 2026. The government aims to balance revenue generation while minimizing the burden on consumers. — El Economista, 28 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's GDP contracted by 0.6% in the first quarter, which was less than expected. This contraction has raised concerns about the country's economic performance under President Claudia Sheinbaum's administration. The article discusses the implications of this contraction for future economic policies. — El Financiero, 22 May 2026. Read more
Inflation in Mexico decreased to 4.11% in the first half of May. The article details which products experienced price increases and decreases during this period, although specific items and their price changes are not mentioned. — El Financiero, 22 May 2026. Read more
US, Mexico launch formal trade talks, haggle over automotive content rules — 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
This Is A Tense Moment For Trade Talks Between U.S. And Mexico — Google News, 28 May 2026. Read more
Mexico, US set three rounds of USMCA trade talks without Canada — Google News, 28 May 2026. Read more
Mexico, EU ink trade deal before USMCA review — Google News, 28 May 2026. Read more
Mexican Peso Falls for Second Day on War and Inflation Concerns — Google News, 28 May 2026. Read more
U.S. and Mexico Face Off in Bilateral Trade Talks, But Where's Canada? — Google News, 27 May 2026. Read more
Inflation & Subsidies — Google News, 27 May 2026. Read more
Banxico Cuts 2026 GDP Forecast, Warns Of Higher Inflation — Google News, 27 May 2026. Read more
First USMCA Joint Review Round Opens in Mexico City — Google News, 27 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: 2026-05-29 by María López
Key Takeaways
With the latest data updates indicating a modal bin shift, market expectations now suggest a substantial chance of no action at Banxico's upcoming meeting. Following shifts in consumer confidence and economic policy uncertainty, our model points toward likely inaction at the next monetary policy decision on February 5, 2026. The hold probability sits at about 58%, reflecting a high likelihood of keeping rates steady. Interestingly, this marks a material change from the previous assessment, where the dominant bin was -25bp. The modal bucket now indicates no rate change, while the second-highest probability suggests a possible cut of 25bp at 39%—a nod to the cautious sentiment surrounding economic conditions.
Recent observations on critical economic indicators underscore the persistent challenges ahead. Noteworthy updates include consumer confidence data indicating a slight decline, while economic policy uncertainty remains elevated. These changes highlight growing concerns about stability and investor sentiment in the face of ongoing geopolitical tensions and domestic issues.
Diving into the drivers, we see a mixed picture emerging that complicates the outlook for Banxico. Current data suggests moderate dovish pressure from rising economic policy uncertainty, alongside slight hawkish influences from bond yields. The consumer price index remains stable, but it’s the heightened uncertainty around public security and economic policy that weighs heavily on the decision-making process. While some drivers exert negligible influence, the ongoing concerns regarding security and economic stability are becoming increasingly relevant, ultimately reminding us that the committee’s judgment will guide actual decisions beyond just model mechanics.
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: 2026-05-29 by María López
Key Takeaways
Bond prices as of 2026-05-29 show the 10Y-3Y spread at 1.53%, reflecting a sharp increase from previous observations. The latest yield curve data reveals that the nominal spread has increased by 0.30% over the last month, which is a positive sign for economic growth expectations. However, the real spread's slight decline hints at underlying vulnerabilities that could challenge long-term stability. The breakeven inflation spread implies that while short-term inflation expectations are moderate, there remains a cautious outlook for persistent inflationary pressures. With the last inversion of the nominal spread ending a year ago, this stability may indicate investor confidence in maintaining a steady policy environment.
The curve shape suggests that the market is aligning with expectations for Banxico to hold the policy rate steady in the near term. Markets appear to be pricing in a dovish tilt as recent consumer confidence data suggests softer economic conditions. Despite the current stability in the yield curve, any significant changes in global inflation pressures or domestic security issues could prompt a swift reevaluation of policy direction. This reflects ongoing tensions within the economy that could challenge investor confidence and necessitate agile monetary responses.
Yield Spread Update
| Spread (10Y−3Y) | 27 May | 28 May 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 1.52 | 1.53 | +0.013 | 1.02 |
| Real | 0.40 | 0.39 | -0.012 | 0.73 |
| Inflation | 1.12 | 1.14 | +0.026 | 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: 2026-05-29 by María López
Key Takeaways
The latest ENOE survey reveals a notable revision in unemployment rates, now sitting at 3.43%, down from 3.98%. The 2026-01 ENOE survey shows unemployment at 3.43%, a drop of 0.0138% from the previous month. This puts the rate around the 14th percentile historically, reflecting a slight improvement. However, it's crucial to note that while the month-on-month change is positive, the year-on-year comparison indicates a significant decline of 0.112%. This nuanced shift hints at persistent underlying vulnerabilities in the labor market, signaling that the path to stability remains rocky.
By gender, the unemployment landscape paints a stark picture. Male and female unemployment rates stand at 3.34% and 3.53%, respectively, revealing a modest divergence. While male unemployment has seen a sharper decline compared to the previous month, female unemployment remains slightly elevated. This growing gap could signal deeper structural issues affecting women's employment opportunities, raising concerns about equity in the labor market.
Informal employment continues to dominate the landscape. The share of informal workers is currently at 55.6%, a slight uptick from last month. This trend indicates a rising reliance on informal employment, which poses risks for job security and benefits access. As the economy grapples with uncertainty, the persistence of high informality levels underscores the need for structural reforms to enhance formal job creation.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.55% | 3.43% | — | — |
| 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: 2026-05-29 by María López
Key Takeaways
Mexican equity markets as of 2026-02 show excess returns at 0.2614, signaling a notable uptick in market performance despite underlying risks. With data through February 2026, realized volatility stands at 0.0096, reflecting a significant rise compared to previous months. Recent fluctuations in excess returns underscore a market grappling with geopolitical uncertainties and economic policy challenges. With this backdrop, liquidity measures like the Amihud index, while not materially changed, highlight ongoing investor caution amid rising stakes in public security and economic conditions.
The decomposition shows that recent volatility has been driven primarily by US policy shocks and real-sector difficulties. These factors have contributed significantly to the uptick in excess returns, as markets react to external pressures and domestic challenges. Persistent drivers like liquidity and financing conditions also continue to play a role, indicating that while returns are up, underlying vulnerabilities remain a concern for investors.
Investor sentiment reflects a cautious outlook as policy uncertainty looms large. Recent sentiment indicators show rising alarm around public security and economic policy uncertainty, with implications for market confidence moving forward. The ongoing discussions highlight fears that escalating violence and governance issues could weigh on economic stability, amplifying the market's volatility.
Volatility Measures
| Measure | Apr 2026 | May 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | -0.0811 | 0.0524 | +0.1335 | US Policy Shocks (+0.137) |
| Realized Volatility | 0.0095 | 0.0092 | -0.0003 | US Policy Shocks (-0.001) |
| Illiquidity (Amihud) | 108.9576 | 99.1233 | -9.8343 | 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: 2026-05-28 by Alexander Dentler
Key Takeaways
Banxico's May 2026 credit release indicates a tightening of money market spreads, reflecting a cautious approach within the lending environment. Following the latest May lending data, rate premia show money market spreads at 0.188, marking a narrowing trend of -0.0791 from the previous month. This movement places the spread around the 5th percentile historically, suggesting a significant contraction in risk appetite among lenders. Such an environment could signal a hesitance to extend credit, as the market grapples with rising economic policy uncertainty and domestic challenges.
Household mortgage rates continue to reflect a challenging affordability landscape as the total annual cost (CAT) of mortgages stabilizes at an average of 13.9%. The total annual cost of mortgages ranges from 10.7% to 28.2%, indicating a considerable burden on borrowers. The implications of the prevailing policy rate environment suggest limited pass-through effects, thereby exacerbating affordability issues for potential homebuyers. As a result, higher borrowing costs may dampen demand in the housing sector, compounding the challenges faced by the market.
Debt issuance patterns show a notable reliance on fixed-rate financing as companies navigate the complexities of current economic conditions. Corporate financing reveals a composition where fixed-rate instruments constitute 18.74% of total debt issuance, while variable-rate instruments (both inflation-linked and other) account for 19.92%. This shift towards fixed-rate financing may reflect a strategic move by firms to hedge against potential interest rate volatility, particularly in an environment characterized by geopolitical uncertainties and fluctuating inflation expectations.
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.
