2025/08/05 | Julia Passabom & Mariana Ramirez
Gross Fixed Investment (GFI) fell by 7.1% YoY in May, aligning closely with Bloomberg’s consensus of -7.0%. By sector, machinery and equipment decreased by 10.3%, with both imported and domestic components declining. Construction fell by 4.3% YoY, with public and private non-residential components also declining. Using seasonally adjusted data, investment increased by 0.9% MoM, exceeding market expectations of +0.4%. Machinery and equipment remained unchanged, while construction grew by 1.4% due to residential construction, although non-residential construction decreased.
On the other hand, private consumption stood at -1.6% YoY, a deeper contraction than the consensus of -0.2%. On a monthly basis, using seasonally adjusted data, private consumption decreased by 1.0%, with domestic goods and services showing negative performances of -2.4% and -0.1%, respectively. However, imported goods modestly grew by 0.3% after a contraction in April (-0.9%).
Our view: May's domestic demand figures showed mixed behavior but were overall positive, with investment being less negative at 0.9% QoQ/SAAR and consumption remaining positive, though slightly down at 3.6%. Looking ahead, we anticipate some support for Mexico's growth from international sources, primarily in manufacturing exports, which still exhibit some frontloading effects, and growth in the tourism sector. The outlook for domestically related sectors is mixed, however, with a moderation in local services and a contraction in investment. If uncertainties regarding trade policy moderate significantly, this might support private investment in the future. We maintain our GDP forecast of an expansion of 0.2% YoY in 2025, with a positive bias now. Regarding monetary policy, a more resilient economy seems consistent with Banxico's hawkish communication, favoring a 25-bps cut in the next meeting (August 7) to 7.75%.
See details below
