2025/10/10 | Julia Passabom & Mariana Ramirez
Industrial production (IP) decreased by 3.6% YoY in August, a negative surprise compared to Bloomberg’s market consensus of -2.0% and our forecast of -2.5%. The annual figures showed a broad-based contraction, with mining at -6.8%, utilities at -2.2%, construction at -4.0%, and manufacturing at -3.1%. Using seasonally adjusted figures, IP decreased by 0.3% MoM, performing worse than the consensus of +0.4%, our forecast of +0.3%, and INEGI’s nowcast of 0.0%. This performance was driven by a contraction in construction (-2.2%, with declines in buildings and civil engineering) and mining (-0.7% MoM, due to metal and oil mining). Manufacturing and utilities partially offset the decrease, with manufacturing growing by 0.2%, as 11 out of 21 subsectors increased; and utilities growing by 1.3%, following unchanged monthly growth in July.
Our take: Today's release showed a challenging third quarter, with the QoQ/SAAR at -3.5% due to declines in manufacturing (-3.0%), construction (-4.4%), and mining (-0.3%), despite positive performance in utilities (+2.1%). Looking ahead, we expect Mexico’s growth to continue receiving some support from external factors, but these will become less relevant, compared to 1Q25. Investment could continue to show signs of improvement, based on the start of public projects, such as railways construction and road maintenance. We forecast 0.6% GDP growth in 2025. In 2026, the first trilateral review meeting of the USMCA will be held no later than July 1, which could potentially create more uncertainty.
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