Background on Mexico’s Industrial Sector and Its Current State
Mexico’s industrial activity experienced a slight uptick in October, rising by 0.7% compared to September, according to the National Institute of Statistics and Geography (Inegi). This improvement comes after four consecutive months of decline, offering a glimmer of hope for the struggling sector.
Key Sectors and Their Performance
The construction sector led the recovery, with a robust 3.8% increase, driven by a 5.5% growth in the building segment—the highest since September 2024 (+6.4%). Mining and electricity, gas, and water also showed positive growth of 0.7% and 1.6%, respectively.
However, the manufacturing sector, which is the backbone of Mexico’s industrial landscape, experienced a slight 0.3% decrease. Out of the 21 manufacturing sub-sectors tracked by the Indicador Mensual de la Actividad Industrial (IMAI), 11 reported monthly declines, with the most significant drops observed in metallurgical basic industries (-2.1%), machinery and equipment (-2.0%), transportation equipment manufacturing (-1.6%), plastics and rubber (-1.4%), and other industries (-0.7%).
Annual Performance and Long-Term Trends
Despite the minor improvement in October, the annual performance of Mexico’s industrial activity remains grim. The cumulative decline for the first ten months of 2024 is 1.7%, mirroring the performance observed in September. This annual decrease is the most substantial since 2024, when a minimal decline of 0.03% was recorded.
- Question:
The four main sectors are mining, construction, electricity, gas, and water, as well as manufacturing. Annually, all four sectors have experienced declines, with mining showing the largest decrease (-7.7%), followed by construction (-2.2%), electricity, gas, and water (-0.8%), and manufacturing (-0.5%). - Question:
Mexico’s industrial activity has struggled in 2024 due to a drastic reduction in public investment in infrastructure, which has negatively impacted the construction sector. Additionally, uncertainties surrounding both domestic and international economic environments have arisen due to the U.S.’s protectionist economic shift and the approval of potential business-impacting reforms.
Conclusion and Future Outlook
With the current trend, Mexico’s industrial activity is on track for its second consecutive year of decline, which is unprecedented in non-crisis years. The sector’s future outlook remains uncertain, contingent on the resolution of existing challenges and potential policy changes.
