2026/04/24 | Julia Passabom & Mariana Ramirez
Economic activity contracted 0.3% YoY in February, a clear downside surprise versus the Bloomberg median (+0.7%) and our forecast (+0.4%). The weakness was driven by industry, which fell 1.3% YoY, mainly reflecting declines in manufacturing and utilities. Primary activities (+2.3%) and services (+0.1%) expanded, but not enough to offset the industrial drag. Within services, 7 of 14 subsectors posted growth, but deep contractions in professional services, business support, and leisure limited the overall performance. As a result, services grew only marginally despite broad-based resilience. Cumulatively, economic activity contracted 0.3% YoY in January–February, a concerning outcome given the low comparison base at the start of 2025.
On a seasonally adjusted basis, activity rose just 0.1% MoM, well below consensus (+0.5%) and our forecast (+0.4%). Industry increased 0.4% MoM, supported by a rebound in mining, manufacturing, and construction. Primary activities declined 0.3% MoM, following a sharp drop in January. Services fell 0.1% MoM, with 8 of 14 subsectors contracting; professional services, business support, and leisure again drove the weakness, dragging monthly growth by ‑0.03pp.
INEGI also released March labor market data. The unemployment rate reached 2.4%, slightly above consensus and our forecast (2.3%). However, employment trends and real wages remain supportive of private consumption.
Our view: The data reinforce the message that the economy started the year on a weak footing, despite a favorable base effect. With activity down 0.3% YoY in January–February and a ‑0.37% carry‑over into 2026, our 1.5% YoY GDP forecast for 2026 now carries a downside bias. Considering today’s data, we now expect a 0.7% QoQ contraction in 1Q26 (-0.35% QoQ previously). Still, we see scope for improvement in the second half of the year, supported by firmer domestic demand and a modest boost from World Cup‑related activity.
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