Background on Fixed Investment and its Importance
Fixed investment, also known as gross fixed capital formation, is a crucial economic indicator that reflects a country’s commitment to long-term growth and development. It includes expenditures on machinery, equipment, and construction, which are essential for businesses to expand their operations and increase productivity. Understanding the trends in fixed investment helps economists, policymakers, and investors gauge the overall health of an economy.
Who is the Instituto Nacional de Geografía y Estadística (Inegi)?
The Instituto Nacional de Geografía y Estadística (Inegi) is Mexico’s official statistics agency, responsible for collecting, analyzing, and disseminating vital economic data. Inegi’s reports provide insights into various aspects of the Mexican economy, including fixed investment, which is essential for understanding the country’s growth trajectory and potential challenges.
July 2025 Fixed Investment Report
Monthly Growth and June Recovery:
In July 2025, Mexico’s fixed investment increased by 1.6% on a monthly basis, recovering from June’s 1.3% decline, according to the Inegi. This growth was primarily driven by higher expenditures on machinery and equipment.
Annual Comparison and Persistent Decline:
Despite the month-over-month improvement, fixed investment remains significantly below its 2024 levels. In July 2025, fixed investment was 7.2% lower than in July 2024. This persistent decline has been ongoing for 11 consecutive months, as reported by the Indicador Mensual de la Formación Bruta de Capital Fijo (IMFBC).
Monthly Breakdown of Fixed Investment
Machinery and Equipment Spending Surge:
The 4.9% increase in spending on machinery and equipment in July 2025 was the most significant month-over-month variation since December 2022. This growth was a key factor in the overall 1.6% monthly increase in fixed investment.
Construction Spending Continues to Decline:
Construction spending has now fallen for two consecutive months and has experienced four declines in the past seven months, contracting by 1.3% in July 2025. Both residential (-0.4%) and non-residential (-1.9%) construction spending components showed reductions.
Fixed Investment Trends in 2025
Pronounced Decline Over the Past Five Months:
Fixed investment has experienced notable fluctuations throughout 2025, with a significant drop over the past five months. This decline contrasts sharply with the 7.8% growth observed during the same period in 2024.
Public vs. Private Investment:
Public investment has been a significant drag on overall fixed investment, with a substantial 22.4% decline in 2025 compared to a 3.5% increase during the same period in 2024. Private investment has also decreased by 4.8%, contrasting with an 8.4% expansion in the corresponding period of 2024.
Key Questions and Answers
- What is fixed investment, and why is it important? Fixed investment, or gross fixed capital formation, measures a country’s long-term growth commitment. It includes expenditures on machinery, equipment, and construction, which are vital for businesses to expand operations and boost productivity.
- What drove the July 2025 increase in fixed investment? The growth was primarily due to higher spending on machinery and equipment, which increased by 4.9% in July 2025.
- Why is fixed investment still below 2024 levels? Despite the monthly recovery, fixed investment remains 7.2% lower in July 2025 compared to July 2024, reflecting an ongoing decline for 11 consecutive months.
- What are the monthly trends in fixed investment components? Spending on machinery and equipment surged by 4.9% in July 2025, while construction spending fell for the second consecutive month, contracting by 1.3%.
- How has fixed investment performed in 2025 so far? Fixed investment has experienced significant fluctuations in 2025, with a pronounced decline over the past five months. Public investment has been a notable contributor to this downturn, while private investment has also decreased.
