2026/07/23 | Julia Passabom & Mariana Ramirez
Economic activity grew 1.1% YoY in May, in line with both Bloomberg consensus and our forecast. In addition, previous data were revised upward, with April growth revised to 2.6% YoY from 2.3% previously reported. After adjusting for calendar effects, activity expanded 2.1% YoY, reflecting broad-based growth across industry (0.2% YoY), services (2.7% YoY, with 9 of 14 subsectors posting gains), and agriculture (7.6% YoY).
On a seasonally adjusted basis, activity declined 0.3% MoM, between consensus expectations of -0.4% and our forecast of -0.2%. Industrial production fell 0.8% MoM, reflecting a broad-based contraction across sectors. Services increased 0.2% MoM, despite declines in five subsectors, while primary activities contracted 0.5% MoM following strong readings in March and April.
Our view: Despite the decline in May, economic activity continues to exhibit some underlying momentum. Growth is currently tracking at 4.8% QoQ SAAR, leaving a 1.5% statistical carry-over into 2026, partly reflecting the upward revision to April’s data. Incorporating today’s release, we estimate 2Q26 GDP growth at 1.2% QoQ and maintain our 2026 GDP growth forecast at 1.1%. Looking ahead, we expect growth to moderate in the second half of the year as subdued household spending, softer labor-market conditions, and the fading boost from World Cup-related expenditures weigh on domestic demand. While the domestic backdrop is likely to remain challenging, the external sector should continue to provide an important offset. Strong manufacturing exports—supported by AI-related investment and the expansion of data-center capacity in the U.S.—have remained a key engine of growth, helping sustain activity despite persistent uncertainty surrounding the USMCA review process.
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