Mexican economy shows mixed signals in the third quarter

Mexico Economic Update

Jesus Cañas, Luis Torres and Dylan Council

September 23, 2026

Mexico's economy grew slightly in July according to preliminary monthly GDP estimates. The consensus forecast for 2026 real GDP growth compiled by Banco de México was unchanged at 1.3 percent (Table 1).

However, the latest data point to mixed growth. Industrial production and exports rose while consumption was flat and employment fell. The peso gained ground against the dollar, and inflation remained elevated.

Output expands in July

The general economic activity index (Indicador Global de la Actividad Económica, IGAE), Mexico's official proxy for monthly GDP growth, edged up 0.1 percent in July according to preliminary estimates (Chart 1). The goods-producing sector (including manufacturing, construction and utilities) grew 0.3 percent, while service-related activities (including trade and transportation) ticked up 0.1 percent. Compared to a year ago, the IGAE was up 1.9 percent.

Industrial production rises

The three-month moving average of Mexico's industrial production (IP) index, which includes manufacturing, construction, oil and gas extraction, and utilities, grew 0.5 percent in June, while Mexico's manufacturing IP inched up 0.1 percent (Chart 2). In the U.S., the three-month moving average of industrial production rose 0.2 percent in July.

Export growth continues

The three-month moving average of Mexico's total exports rose 3.7 percent in July (Chart 3). Exports in the manufacturing sector, the largest component of Mexico's trade, increased 4.2 percent. Oil exports declined 2.1 percent but were at their second-highest level in the past year. Through July, total exports were up 22.9 percent, with manufacturing exports up 24.1 percent but oil exports down 6.1 percent from the same period last year.

Private consumption flat in June

The private consumption index (Indicador Oportuno del Consumo Privado, IOCP), an estimate of monthly consumption, was unchanged in June (Chart 4). Domestic goods consumption rose 0.3 percent, while services consumption was flat and imported goods consumption fell 1.2 percent. Compared to a year ago, the IOCP was up 2.1 percent, with domestic goods up 1.3 percent, services flat and imported goods up 6.9 percent.

Payrolls shrink in August

Formal employment (jobs with government benefits and pensions) decreased for a second straight month, with employment dipping an annualized 0.5 percent (9,100 jobs) in August (Chart 5). On a year-over-year basis, employment was up 1.5 percent. Total employment, which represents 60.1 million workers and includes informal sector jobs, contracted by 0.1 percent year over year in July. The unemployment rate, which tracks only the formal sector, ticked down from 2.8 percent in June to 2.7 percent in July.

Mexican peso edges higher

The Mexican currency averaged 17.1 pesos per dollar in August, stronger than July's 17.5 pesos per dollar (Chart 6). After registering more volatility during the first quarter of the year, the exchange rate has changed little over the past few months.

Remittances grow in July

The three-month moving average of inflation-adjusted remittances to Mexico rose 0.3 percent in July after declining 1.5 percent in June (Chart 7). Through July, remittances were down 0.2 percent compared with the same period last year. Transfers from the U.S. account for 95 percent of Mexican remittances.

Headline inflation ticks up in August

Mexico's headline consumer price index (CPI) grew 3.3 percent year over year in August after increasing 3.1 percent in July (Chart 8). Core CPI inflation, which excludes food and energy, slowed to 3.9 percent, while services inflation moderated to 4.3 percent. In August, Mexico's central bank maintained its benchmark rate at 6.5 percent. The central bank anticipates that above-target inflation will persist before returning to the bank's 3.0 percent target by the fourth quarter of 2027.