Stay informed with the latest insights on Mexico's economy via statistics and AI analysis and synthesis.
Updated: 2026-03-28
The article discusses the current approach of Banxico, led by Governor Victoria Rodríguez Ceja, in maintaining consistency with its mandate amid evolving economic conditions. It highlights concerns regarding the central bank's decisions and their alignment with its objectives. The article emphasizes the importance of transparency and accountability in Banxico's actions as it navigates challenges in the economic landscape. — El Financiero, 28 Mar 2026. Read more
The article discusses key economic developments from March 23 to 27, focusing on monetary policy, inflation, and economic activity. It highlights the positions of Banxico Governor Victoria Rodríguez Ceja and Fed Chair Jerome Powell regarding current economic conditions. Additionally, it addresses the implications of these policies on the broader economic landscape. — El Economista, 28 Mar 2026. Read more
The Mexican peso has depreciated beyond 18 per dollar, experiencing a decline over the week. This drop is attributed to rising concerns regarding the ongoing war, which has affected market stability and investor confidence. — El Economista, 27 Mar 2026. Read more
The ongoing conflict in the Middle East is anticipated to extend until April. Additionally, the exchange rate closed at 18.12 pesos per dollar. — El Financiero, 27 Mar 2026. Read more
The Mexican peso has extended its decline, trading above 18 per dollar, due to ongoing uncertainty related to the war. This situation has raised concerns among investors, impacting the currency's stability in the foreign exchange market. — El Economista, 27 Mar 2026. Read more
Wall Street experienced a decline, with the Nasdaq dropping by 2.15%. The downturn was attributed to rising tensions in the Strait of Hormuz. Additionally, the Mexican Stock Exchange (BMV) also saw a decrease in its performance. — El Financiero, 27 Mar 2026. Read more
Santander has reaffirmed its objectives despite ongoing uncertainty in the market, attributing its resilience to a diversified business model. The bank emphasized that its varied operations across different sectors help mitigate risks and maintain stability in challenging economic conditions. — El Economista, 27 Mar 2026. Read more
Wall Street ended the trading session with losses, as the Nasdaq Composite fell by 2.38%. The Mexican Stock Exchange (BMV) also experienced a decline, closing down by 1.65%. This downturn reflects ongoing market volatility. — El Financiero, 26 Mar 2026. Read more
The article discusses the current economic challenges affecting personal finances in Mexico. It highlights concerns over inflation and rising costs, which are straining household budgets. The piece emphasizes the need for individuals to reassess their financial strategies in light of these economic pressures. — El Financiero, 26 Mar 2026. Read more
Wall Street experienced a decline due to rising global uncertainties. Investors are reacting to various geopolitical tensions and economic indicators that have created a cautious market environment. The article highlights the impact of these factors on investor sentiment and market performance. — El Economista, 25 Mar 2026. Read more
China Launches Two Trade Investigations Against United States — Google News, 27 Mar 2026. Read more
Mexico swings to deficit as import surge outpaces export growth — Google News, 27 Mar 2026. Read more
Mexico Unemployment Rises in February — Google News, 27 Mar 2026. Read more
Banxico set Mexico’s interest rate at 6.75%, falling short of the widely expected 7% — Google News, 27 Mar 2026. Read more
Bucking expectations, central bank cuts interest rate despite inflationary pressures — Google News, 27 Mar 2026. Read more
China threatens Mexico with trade reprisals over 50% import duties — Google News, 26 Mar 2026. Read more
China threatens retaliation over Mexico’s tariff hikes — Google News, 26 Mar 2026. Read more
Mexico Banxico Interest Rate Decision below expectations (7%): Actual (6.75%) — Google News, 26 Mar 2026. Read more
Bank of Mexico Cuts Benchmark Interest Rate in Split Decision After Pause — Google News, 26 Mar 2026. Read more
Banxico Holds Rates: Why Growth Takes a Backseat to Oil Risks — Google News, 26 Mar 2026. Read more
Updated: 2026-03-28 by Pablo Rivas
Key Takeaways
Following the March 26, 2026 decision, Banxico's policy rate stands at 6.75% after a recent cut of 0.25%. After Banxico's March 26 meeting, the target rate was adjusted downwards to 6.75%. This recent cut represents the first adjustment in a series of meetings where the rate had remained steady for nearly three years. Economists are closely watching how this decision fits into the broader context of declining inflation and ongoing economic uncertainties as the central bank gears up for its next decision on May 7.
Relative to the United States, the Fed's target rate currently sits at 3.62%, creating a rate differential of 3.13%. The Fed's target rate remains at 3.62%, significantly lower than Banxico's 6.75%. This divergence comes as the Fed has held steady since its last cut, reflecting different economic conditions and policy priorities. The first-mover advantage has consistently favored the Fed, influencing capital flows and positioning Banxico in a challenging spot as it considers future adjustments.
The rate differential creates a complex landscape for capital flows and currency pressures. The rate differential at 3.13% suggests a potential draw for foreign capital, yet it also amplifies pressures on the peso amid ongoing economic policy uncertainty. For markets, the implications of this differential may lead to increased volatility as investor sentiment shifts between seeking higher returns and managing risks tied to security and law enforcement issues in Mexico.
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: 2026-03-28 by Pablo Rivas
Key Takeaways
With market signals leaning towards a hold, Banxico's May 7 decision is shaping up to be a nail-biter. The latest updates suggest that as we look ahead to the May 7 policy decision, there's a substantial chance of no action, with model-based expectations indicating about 58% probability for a hold. This reflects a notable shift from the previous modal bucket, which was -25bp, now landing firmly at ±0bp. The current expected move is an adjustment of -11bp, a change that underscores the cautious sentiment permeating through the economic landscape.
Recent data updates have provided fresh insights into the drivers at play. New observations on key economic indicators have been factored in since our last update, particularly around inflation and credit spreads. While inflation has shown signs of easing, the overall economic policy uncertainty continues to loom large, complicating the decision-making process.
Driving this cautious outlook are several key factors influencing Banxico's policy stance. The model indicates slight dovish pressure from declining inflation, while economic policy uncertainty remains a significant concern, pulling sentiments in a more cautious direction. The peso's stability and bond yields have had a negligible impact on the overall outlook. Ultimately, the committee's decision will hinge on their judgment of these dynamics, rather than solely on model metrics.
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: 2026-03-28 by Pablo Rivas
Key Takeaways
Bond prices as of 2026-03-28 show the 10Y-3Y spread at 0.94%, reflecting a nominal spread that has tightened by 0.60% since the last observation, while the real spread holds steady at 0.52%. The latest yield curve data reveals the nominal spread at 0.94%, with a corresponding real spread of 0.52%, indicating a normal curve shape without inversion. The breakeven inflation spread, currently at 0.42%, suggests that markets expect modest inflation ahead, albeit with a slight decline compared to prior observations. This environment underscores the cautious optimism permeating the bond market, as investors navigate through economic uncertainties and evolving inflation expectations.
The curve shape suggests a dovish outlook aligning with market expectations for Banxico's May policy decision. Markets appear to be pricing in a potential hold on the policy rate, consistent with the current yield curve dynamics. However, there's a nuanced disconnect as the curve reflects a tightening in nominal spreads while Banxico signals a cautious approach towards future policy adjustments based on inflation and growth metrics. This divergence between market sentiment and the central bank's cautious stance creates an intriguing backdrop for investors as they brace for potential shifts.
Yield Spread Update
| Spread (10Y−3Y) | 26 Mar | 27 Mar 2026 | Δ | NS-DFM |
|---|---|---|---|---|
| Nominal | 0.96 | 0.94 | -0.020 | 0.88 |
| Real | 0.46 | 0.52 | +0.056 | 0.74 |
| Inflation | 0.50 | 0.42 | -0.076 | 0.14 |
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: 2026-03-25 by Pablo Rivas
Key Takeaways
The mid-March 2026 CPI release shows headline inflation at 4.47%, remaining above Banxico's target band. The mid-March 2026 CPI release shows headline inflation at 4.47%, which is around the 62nd percentile and notably above Banxico's 2%-4% target band. This marks a 0.35% increase from the previous data point, indicating that inflationary pressures are still present, even as they are easing compared to last year. The persistent above-target inflation raises questions about how the central bank will navigate its policy path in the upcoming meeting, especially with the economy's current uncertainties.
Core inflation, which excludes food and energy prices, offers a different narrative as it remains elevated but comparatively stable. Core inflation, which excludes volatile components, stands at 4.52%, around the 76th percentile, slightly diverging from the headline figure. This reflects a modest increase of just 0.01% from the last release, signaling that while overall consumer prices are rising, the underlying inflation trends are stabilizing. The core rate's proximity to the target suggests that if trends continue, Banxico might feel less pressure to act aggressively, though it’s still above the desired threshold.
Trade prices show notable movements, particularly with export prices on the rise. Trade prices have seen significant fluctuations, with export prices climbing to 7.05%, a strong signal of increasing international demand and potential cost pressures for domestic markets. This uptick in export prices could feed back into domestic inflation, complicating Banxico's task of balancing economic growth with price stability. Meanwhile, import prices are less volatile at 2.30%, suggesting some insulation from global price shocks, but the overall picture remains one of caution as the central bank prepares for its upcoming decision.
| 1H Mar 2026 | 1H Mar 2027 | |||||
|---|---|---|---|---|---|---|
| Series | Current | Prev. Fcast | Error | 12M Fcast | Prev. 12M | Rev. |
| Headline CPI | 4.5 | — | — | 4.3 | 4.3 | +0.00 |
| Core CPI | 4.5 | — | — | 4.0 | 4.0 | +0.00 |
| Export Price Index | — | — | — | 3.7 | 3.7 | +0.00 |
| Import Price Index | — | — | — | 3.0 | 3.0 | +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 63 evaluation windows using the Vector Autoregression (VAR). Out-of-sample backtest over 63 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 1.14 vs 1.07 naive, n=63); Core CPI (RMSE 0.67 vs 1.12 naive, +40% improvement, n=63); 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: 2026-03-25 by Pablo Rivas
Key Takeaways
Brent oil prices updated through February 2026 indicate a modest rebound but remain under pressure. Brent oil prices, now at $69.41 as of February 2026, are down 7.7% year-over-year. Despite a recent uptick of 7.5% month-on-month, the overall momentum suggests a cautious market. This is particularly relevant for Mexico, where oil is a crucial revenue driver for Pemex and federal finances.
Copper prices continue to soar, reflecting strong industrial demand amidst global recovery. Currently priced at $12,951.34 as of February 2026, copper has skyrocketed 38.8% year-over-year. Although recent momentum shows a slight decline of 0.3% month-on-month, the overall trend remains robust. This surge is significant for Mexico's mining sector, especially in Sonora, which dominates national production.
Corn prices are stabilizing after recent fluctuations, highlighting ongoing challenges in the agricultural sector. Corn is priced at $210.64 as of February 2026, reflecting a 4.8% decline year-over-year. The price has increased by 3.3% month-on-month, indicating a possible recovery. For Mexico, where corn is a staple and a key aspect of food security, these shifts directly impact smallholder farmers and tortilla prices.
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: 2026-03-24 by Alexander Dentler
Key Takeaways
The January 2026 IMSS release shows unit labor costs at 2.27%, reflecting a notable increase, indicating that wages are outpacing productivity growth. Following January's formal sector wage data, ULC in manufacturing has risen, with the growth rate now at 2.27%, around the 62nd percentile. This upward trend suggests that wages are increasing faster than productivity, which could lead to cost-push inflation pressures and diminish competitiveness in the sector.
Purchasing power among formal workers continues to show positive momentum, with real wages improving significantly. Real wages in the formal sector increased to 4.09%, indicating a positive trajectory for purchasing power. This growth implies that households are experiencing an enhancement in their financial well-being, allowing for better consumption prospects amid a generally challenging economic landscape.
Across sectors, a discernible divergence is evident in real wage growth, particularly benefiting the retail sector. Manufacturing and retail diverge in terms of real wages, with the retail sector outperforming, currently at 4.09%. In contrast, manufacturing real wages have stagnated, reflecting an environment where retail workers are gaining more purchasing power relative to their manufacturing counterparts.
SARIMAX Forecast Comparison
| Series | Current | Prev. Forecast | Error | 12M Forecast | Prev. 12M | Revision |
|---|---|---|---|---|---|---|
| ULC Manufacturing | — | — | — | 1.6 | 1.6 | +0.00 |
| ULC Retail | — | — | — | 3.8 | 3.8 | +0.00 |
| Real Wage Mfg | — | — | — | 1.7 | 1.7 | +0.00 |
| Real Wage Retail | — | — | — | 4.1 | 4.1 | +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: 2026-03-21 by María López
Key Takeaways
The latest ENOE survey shows unemployment at 3.4%, hitting the 1st percentile historically, but the underemployment rate remains stubbornly high. The March 2026 ENOE survey shows unemployment at 3.4%, around the 1st percentile, continuing its downward streak with a drop of -0.0134% from the previous month. Despite this positive momentum, the underemployment rate lingers at a high 12.2%, indicating a significant portion of the workforce is not fully utilized. This disparity signals that while fewer people are officially jobless, many still struggle to find adequate work, highlighting ongoing challenges in the labor market.
By gender, male unemployment is clocking in at 3.5%, compared to female unemployment at 3.63%, marking a concerning divergence. Male and female unemployment rates are showing troubling signs of divergence, with men at 3.5% and women at 3.63%, both near historical highs. While male unemployment has seen a slight uptick of 0.158% month-over-month, female unemployment also rose by 0.0905%. This gap raises questions about the labor market's ability to provide equitable opportunities for both genders amidst fluctuating economic conditions.
Informal employment is on the rise, now at 56%, which underscores a worrying trend in job security. The share of informal workers has climbed to 56%, reflecting a significant increase of 0.383% from last month. This persistent rise in informality indicates that many workers are still unable to secure stable, formal employment. Such trends not only impact individual livelihoods but also pose challenges for economic growth and public policy, as informal sectors often lack the protections and benefits of formal employment.
DFM Employment Nowcasts
| Indicator | Last Obs. (Q1 2026) | Nowcast (Q1 2026) | Prev. Nowcast | Revision |
|---|---|---|---|---|
| Unemployment Rate | 2.61% | 3.40% | — | — |
| Underemployment Rate | 10.42% | 12.21% | — | — |
| Male Unemployment | 2.50% | 3.50% | — | — |
| Female Unemployment | 2.61% | 3.63% | — | — |
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 16 evaluation windows using the Dynamic Factor Model (DFM). Out-of-sample backtest over 16 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 0.41 vs 0.10 naive, n=13); Underemployment (RMSE 1.25 vs 0.49 naive, n=10); Male Unemployment (RMSE 0.27 vs 0.25 naive, n=10); Female Unemployment (RMSE 0.27 vs 0.27 naive, +0% improvement, n=10).
Updated: 2026-03-14 by Pablo Rivas
Key Takeaways
INEGI's Q1 2026 productivity release shows secondary sector output at 100, reflecting a slight decline in productivity amidst ongoing economic uncertainty. The latest INEGI productivity data for Q1 2026, released in March, indicates that secondary sector output stands at 100, which is down 1.11 from the previous month. This decline is predominantly driven by the mining and energy subsectors, both of which face significant headwinds, suggesting that growth is not broad-based and remains concentrated in a few industries. The construction sector, however, continues to exhibit resilience, supporting overall productivity levels amid a challenging environment.
Manufacturing composites show a concerning divergence between productivity and sales metrics. Across the PCA indices, recent trends reveal a decline in productivity alongside a modest increase in sales, indicating potential sustainability concerns for future growth. While inventory levels have decreased, labor demand remains weak, reflecting a cautious stance among manufacturers. This disconnect raises questions about the underlying health of the sector and whether current sales levels can support ongoing productivity improvements.
Within manufacturing, the top-performing subsector is food, which continues to show strong productivity levels. The top-performing subsectors include food and petroleum products, with food maintaining a solid grip at 111. In contrast, the transport equipment sector lags significantly, registering at only 88.4, which highlights a critical vulnerability within manufacturing. Given that food accounts for nearly 20% of the manufacturing composition, its strength is crucial for supporting overall sector performance.
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: 2026-02-06 by Jorge Martínez
Key Takeaways
The January 2026 consumer confidence survey shows the general index at 1.15, reflecting a slight dip in sentiment as worries about rule of law and security continue to cast a long shadow. INEGI's latest January release reveals confidence at the 87th percentile, indicating that while consumers are generally optimistic, they are feeling the pinch as the index fell by 0.123 points from the previous month. The most striking divergence comes from the durables-specific index, which remains a robust 2.11 and suggests that consumers are still keen to splurge on big-ticket items, even as confidence in general stability wanes. This discrepancy hints at a complex consumer psyche that’s eager to buy but wary of the broader economic landscape.
Consumer confidence surveys gauge how secure households feel about their income and the economy. The general confidence index reflects overall sentiment, while sector-specific measures — such as willingness to purchase durables or housing — reveal spending appetite in categories most sensitive to interest rates. Stronger confidence supports consumption and can add inflationary pressure; weaker confidence signals caution and potential slack. For monetary policy, these indicators help anticipate whether rate moves are restraining or stimulating household demand.
COMING SOON...
Updated: 2026-03-04 by Ignacio Crane
Key Takeaways
The February 2026 SPF survey reveals a modest decline in economic sentiment. The February 2026 SPF survey shows the aggregate Concern Index at 2.82, placing it around the 62nd percentile. This marks a slight decrease of 0.01 from the previous month, reflecting a continued trend of concern that has now persisted for three months. The implications of this decline suggest that while sentiment remains relatively elevated, there is a cautious outlook among economists regarding the immediate economic landscape.
The evolving landscape of economic constraints highlights significant concerns for policymakers. Economists have identified public insecurity as the foremost constraint, comprising 11.23% of the responses, followed closely by US trade policy at 7.64% and a lack of structural change at 4.40%. Notably, public insecurity has increased by 1.16% month-over-month, underscoring the growing anxiety surrounding safety and stability. Such persistent concerns signal potential challenges for both domestic and foreign investment confidence.
Recession concerns are currently perceived to be moderate among economists. The perceived probability of recession stands at 25.0% for the current quarter, positioning it in the 75th percentile historically, suggesting elevated concern relative to past norms. This moderate level reflects a cautious sentiment, as expectations for the next quarter indicate a slight decline to 20.0%. These figures may indicate a stabilizing economic outlook but also highlight the need for vigilance in monitoring underlying risks.
Current FX expectations indicate that forecasters see the peso as overvalued against the dollar. According to forecasters, the current month's misalignment shows the peso perceived as overvalued by 0.157, a signal of potential weakness in the currency relative to expectations. This sentiment persists across shorter-term forecasts, suggesting a consistent view of the peso's valuation over the coming months. Such perceptions could have implications for trade and investment flows, further complicating the 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: 2026-03-28 by Pablo Rivas
Key Takeaways
Mexican equity markets as of March 28, 2026, show excess returns at 0.0254, reflecting a modest decline in volatility amid cautious sentiment. With data through March 28, 2026, realized volatility stands at 0.0077, which signals a slight dip compared to previous figures. The illiquidity measure, based on the Amihud index, dropped significantly to 103.63, suggesting less market friction than in recent months. This shake-up in liquidity dynamics could be a double-edged sword, as it may indicate both improving market conditions and a potential underestimation of risk by investors. Overall, market participants are treading lightly, with volatility levels hovering around historical norms.
Recent volatility has been driven by a mix of US policy shocks and ongoing economic uncertainty, painting a complex picture for investors. The decomposition shows that US policy changes have been a primary contributor to the recent shifts in excess returns, alongside persistent uncertainties in the economic landscape. This interplay has kept market participants on their toes, with a notable uptick in concerns surrounding economic policy and public security issues. As such, the landscape remains fraught with mixed signals, urging caution among traders as they navigate these turbulent waters.
Investor sentiment remains cautious, reflecting broader economic concerns that are shaping market behavior. Policy uncertainty, as evidenced by rising levels of economic policy uncertainty (EPU), continues to weigh on investor confidence. This aligns with alarmist discussions on social platforms, where public security issues dominate the narrative. As the market gears up for Banxico's decision on May 7, the atmosphere is laden with apprehension, indicating that sentiment will likely remain sensitive to new developments in both economic and security realms.
Volatility Measures
| Measure | Feb 2026 | Mar 2026 | Δ | Top Driver |
|---|---|---|---|---|
| Excess Return | 0.2614 | -0.3867 | -0.6481 | US Policy Shocks (+0.139) |
| Realized Volatility | 0.0096 | 0.0123 | +0.0027 | Investor Sentiment (-0.001) |
| Illiquidity (Amihud) | 88.4113 | 148.4479 | +60.0366 | Investor Sentiment (-18.370) |
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: 2026-03-28 by Pablo Rivas
Key Takeaways
Banxico's March 2026 credit release shows money market spreads tightening, signaling a cautious shift in lending conditions. Following the latest March lending data, rate premia are tightening, with the TIIE 28d and TIIE 91d rates standing at 0.37% and 0.41%, respectively. This indicates a narrowing trend, with spreads tightening by -0.0949 since last month. Such a shift suggests a more stable lending environment, but it’s crucial for fund managers to keep an eye on how these movements interact with investor sentiment as we approach the May policy meeting.
Household mortgage rates reflect ongoing affordability challenges, with the total annual cost (CAT) averaging 13.9%. The total annual cost of mortgages ranges from 11.1% to 28.2%, highlighting significant variability in affordability for borrowers. As the policy rate stabilizes, the pass-through to mortgage rates remains a key concern for households, complicating the landscape for potential homebuyers and affecting overall housing market dynamics.
Debt issuance patterns show a marked preference for fixed-rate instruments, signaling a strategic shift in corporate financing. Corporate financing is increasingly leaning towards fixed rates, which now account for 18.74% of total debt issuance. This trend suggests that firms are opting for stability amid uncertain economic conditions, while variable rates remain lower at around 19.92%. Such a shift may indicate a cautious approach to financing as companies brace for potential economic 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.
