Background on the Relevance of Mexico’s Industrial Sector
Mexico’s industrial sector, a crucial component of the country’s economy, experienced a significant downturn in the first quarter of 2025. This decline was influenced by both international and domestic uncertainties, making it essential to understand the factors at play.
The industrial sector, also known as the secondary economy, accounts for a substantial portion of Mexico’s GDP. It encompasses various activities such as manufacturing, mining, construction, and utilities. The recent slowdown primarily affected the manufacturing industry, which plays a pivotal role in Mexico’s economic growth and global competitiveness.
March Industrial Activity Falls 0.9%
According to the National Institute of Geography and Statistics (Inegi), Mexico’s industrial activity index decreased by 0.9% in March 2024, marking its fourth consecutive monthly decline over the past six months. This downturn was largely attributed to a 1.1% drop in manufacturing, which serves as the backbone of Mexico’s industrial sector.
Manufacturing Sector Struggles
In March, 16 out of 21 manufacturing sub-sectors reported declines, compared to only three in February. The most significant drops were observed in the following industries:
- Printing industry (-6.5%)
- Metal product manufacturing (-5.5%)
- Wood industry (-4.7%)
- Paper industry (-4.5%)
- Leather and leather product manufacturing (-4.3%)
Other notable manufacturing sub-sectors that experienced declines included transportation equipment manufacturing (-1.1%) and food products (-0.2%).
Minería y Servicios Públicos also Decline
Besides manufacturing, two other key industrial sectors also experienced declines in March:
- Mining fell by 2.7%, marking its largest monthly drop since July 2023 (when it declined by 3.6%).
- Public utilities, including electricity generation, gas transportation by pipeline, and water distribution, decreased by 1.1%. This sector has been contracting for four consecutive months.
Construction Sector Shows Resilience
Despite the overall downturn, the construction sector demonstrated resilience with a 0.8% increase in March, driven by the building sub-sector (mainly private investment) which grew by 1.5%.
First Quarter: Industrial Activity in the Red
On an annual basis, Mexico’s industrial activity fell by 0.7% in the first quarter of 2025, contrasting with the 0.8% growth observed during the same period in 2024.
The mining sector was the primary contributor to this decline, dropping by 9.3%. Public utilities decreased by 0.8%, and construction saw a 0.2% decline. Despite the March slowdown, manufacturing still managed an accumulated growth of 0.7% in the quarter.
Key Questions and Answers
- What caused the recent decline in Mexico’s industrial activity? The primary cause was a slowdown in the manufacturing sector, which experienced a 1.1% decrease in March. Other contributing factors included declines in the mining (2.7%) and public utility sectors (1.1%).
- Which manufacturing sub-sectors had the most significant declines? The printing, metal product manufacturing, wood, paper, and leather industries all experienced notable drops ranging from -4.3% to -6.5%.
- How did the construction sector perform amidst the overall decline? The construction sector showed resilience with a 0.8% increase in March, driven by the building sub-sector which grew by 1.5%.
- What was the annual growth rate of Mexico’s industrial activity in Q1 2025? The industrial activity contracted by 0.7% in the first quarter of 2025, compared to a growth rate of 0.8% during the same period in 2024.
