Mexico's industrial production declined by 1.2pc in July from the prior month, as manufacturing and construction got off to a weak start for the third quarter.
The contraction in the July industrial activity indicator (IMAI), reported Thursday by statistics agency Inegi, follows on an updated 0.3pc decline in June — revised from the 0.1pc contraction Inegi initially reported for June.
The July result also marks two months of downside surprises for analysts, with the consensus provided by Mexican bank Banorte for July forecasting a 0.2 decline in July after having projected a 0.2pc expansion for June.
By sectors, manufacturing output declined 1.6pc in July, with two thirds of its 21 categories declining, following zero growth in June.
Within manufacturing, the transportation equipment component, which includes light vehicles, marked a 4.1pc decline in July after falling 0.7pc in June.
Uncertainty will persist moving forward with US president Donald Trump's hike in tariffs on Mexican goods to 30pc from 25pc, announced for 1 August, postponed for 90 days, or until the end of October.
The revision process for the USMCA free trade agreement further clouds the outlook for manufacturing with formal trade discussions expected to start in late September or October and last to mid-2026.
Construction declined by 1.2pc in July, marking a second consecutive month of declines after the 0.4pc decrease in June, "with broad losses inside", said Banorte, though the bank still foresees overall expansion in construction during the second half of 2025.
Under the finance ministry's proposed 2026 budget, now before congress, resources allocated for priority infrastructure projects amount to Ps536.8bn ($29bn), representing a 174pc annual increase in real terms compared to the budget for 2025.
The mining component expanded for the first time since April, rising 1.9pc in July after declining 1.1pc in June. This was supported by a 1.2pc increase in oil and gas production.
Non-hydrocarbons mining, meanwhile, expanded 2pc in July after rising 2.4pc in June.
