Background on Key Figures and Relevance
The Instituto Nacional de Geografía y Estadística (Inegi) reported that the gross fixed capital formation, which includes investment in machinery, transportation equipment, and construction by economic agents, grew by 0.9% in May 2025 compared to the previous month.
This modest monthly increase only managed to lessen its annual decline, which dropped from 7.6% in April to 6.7%. This marked the ninth consecutive monthly decline compared to the previous year.
The slight boost in May was primarily due to the construction sector, specifically residential construction, where investment saw a significant monthly increase of 7.8%.
However, machinery and transportation equipment spending stagnated, showing an overall 0% variation. This reflected mixed behavior: while domestic product spending increased by 3.4%, imports saw a decrease of 1.8%. Over the first five months of 2025, gross fixed capital formation accumulated an annual decline of 7%, indicating a sharp loss of momentum compared to the January-May 2024 period when it grew at a rate of 9.6%.
Public Investment as the Main Driver of Decline
The primary cause of the decline is the public investment component, which has plummeted by 22.2%. Private investment, on the other hand, shows a contraction of 5%.
Private Consumption Surprises by Declining
Meanwhile, in May 2025, Mexican household private consumption returned to negative numbers as it contracted by 1% compared to the previous month. This outcome was worse than anticipated based on Inegi’s timely estimation.
The decline occurred after a 0.9% increase in April and resulted in private consumption being 0.9% below the May 2024 level, marking a return to negative numbers since December-March showed consecutive annual declines.
May’s decline originated from the national consumption segment, which fell by 1.3%. Meanwhile, imported goods consumption grew by 0.3%.
Cumulatively, private consumption has dropped by 1.1% from January to May, contrasting with the 4.9% expansion a year prior.
Key Questions and Answers
- What is gross fixed capital formation? It refers to investments in machinery, transportation equipment, and construction by economic agents.
- Who are the key figures mentioned? The Instituto Nacional de Geografía y Estadística (Inegi) and Mexican households are the main subjects.
- Why is the 0.9% monthly growth in gross fixed capital formation insufficient? This modest increase only managed to lessen the annual decline, which still stands at 6.7%, marking the ninth consecutive monthly decline compared to the previous year.
- What caused the decline in private consumption? The decline originated from the national consumption segment, which fell by 1.3%. However, imported goods consumption grew by 0.3%.
- What is the main driver of the investment decline? The primary cause is the public investment component, which has plummeted by 22.2%. Private investment, on the other hand, shows a contraction of 5%.
