Industrial production (IP) decreased by 4.0% YoY in April, which was a negative surprise compared to Bloomberg’s market consensus and our forecast, both of which were at -3.5%. The annual figures showed widespread declines, with an unfavorable calendar effect due to the timing of Holy Week: construction fell by 6.8%, manufacturing by -2.6%, mining by -7.7%, and utilities by -1.7%. Using seasonally adjusted figures, IP increased by 0.1% MoM, following a strong contraction last month and performing better than INEGI’s nowcast of -0.1%. This performance was driven by growth in mining (1.3%, with widespread expansions), manufacturing (0.7% MoM, with 15 out of 21 subsectors increasing), and utilities (0.1%). Construction partially offset the increase, contracting by 2.0% due to building edification. Momentum in the industrial sector improved in April, with the QoQ/SAAR at 3.8%.
Our take: Today's release showed a positive bias as of April, with the QoQ/SAAR at 3.8% due to manufacturing and construction, despite negative performance in other sectors. Looking ahead, we continue to expect that shifts in U.S. trade policy will generate distortions in manufacturing exports, such as temporary inventory accumulation and a reorganization of supply chains. Additionally, high uncertainty is likely to be reflected in low levels of private investment in Mexico, which should imply weak private construction and manufacturing going forward. The government is focused on strengthening domestic activity amid changes in the global outlook, which might modestly drive public construction in the second half of 2025.
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