Overview of Business Confidence in Mexico
In September, the confidence of business owners showed a slight increase compared to the previous month. However, it continued to remain below the critical threshold of 50 points for the seventh consecutive month, indicating that the overall perception remains in contraction territory.
The Global Indicator of Business Confidence (IGOEC) stood at 49.4 points, with seasonally adjusted figures, marking a mere 0.1-point increase from August and its third consecutive month of growth.
Annual Comparison and Sectoral Analysis
On an annual basis, the indicator dropped 1.6 points from September 2024, totaling 17 months of annual declines according to data from Mexico’s National Institute of Statistics and Geography (Inegi).
The IGOEC is based on the opinions of business owners from four sectors: manufacturing, construction, commerce, and private non-financial services regarding the country’s economic situation and their own businesses.
Janneth Quiroz, director of Economic Analysis at Monex Casa de Bolsa, explained that “despite the continued contraction in business confidence for seven consecutive months, the indicator has shown three monthly gains, which may reflect increased optimism among business owners.”
Quiroz added, “Given the global trade uncertainty and pressures on economic activities following modest growth in the first half of the year, businesses are likely to remain cautious.”
Mixed Sector Performance
The Indicator of Business Confidence (ICE) displayed mixed results across different economic sectors measured by Inegi’s Monthly Business Opinion Survey (EMOE).
In the manufacturing sector, the ICE reached 49.7 points, a slight increase of 0.3 points from August. Despite this advance, the indicator has remained below the 50-point threshold for seven consecutive months.
The component assessing whether it’s the right time for investment showed a positive sentiment (+0.5 points), while perceptions of the company’s current economic situation fell (-0.2 points) and the country’s future economic outlook remained unchanged.
Sector-Specific Insights
- Construction: The ICE advanced 0.3 points in September compared to August, reaching 46.5 points and remaining below the 50-point threshold for thirteen consecutive months.
- Commerce: The ICE closed September at 48.2 points, a decrease of -0.3 points from the previous month. This indicator has been below 50 points for seven consecutive months.
- Services: The ICE in private non-financial services advanced 0.2 points in September compared to August, reaching 50.6 points and staying above the 50-point threshold for three consecutive months.
In the construction sector, business owners’ perceptions of the country’s future economic situation (-1.5 points) and investment timing (-0.7 points) were negative, while their view of the company’s current economic situation improved (+1.1 points).
In commerce, the sentiment regarding the country’s current economic situation decreased (-2.1 points), while the perception of investment timing improved (+1.8 points).
Key Questions and Answers
- What is the Global Indicator of Business Confidence (IGOEC)? The IGOEC measures business confidence across four sectors: manufacturing, construction, commerce, and private non-financial services. It is based on opinions about the country’s economic situation and each business’s circumstances.
- Why is the 50-point threshold significant? A reading above 50 points indicates optimism and growth expectations, while a reading below 50 points suggests pessimism and contraction expectations.
- What factors contribute to the current state of business confidence? Global trade uncertainty and pressures on economic activities following modest growth in the first half of the year are key factors influencing business owners’ cautious outlook.
