Mexico’s Business Confidence index, as reported on December 2, 2025, by the Sigmanomics database, declined to 48.40 from 48.90 in November, missing the consensus estimate of 49.00. This marks the lowest level since May 2025’s 48.50 and continues a downward trend from the March peak of 50.40. The sub-50 reading signals contractionary sentiment among Mexican firms, reflecting caution amid evolving macroeconomic and geopolitical challenges.

Drivers this month

• Slower domestic demand growth amid rising borrowing costs.
• Heightened uncertainty from global trade tensions and US monetary tightening.
• Persistent inflation pressures limiting consumer spending power.

Policy pulse

The Bank of Mexico’s recent rate hikes to combat inflation have tightened financial conditions, contributing to subdued business optimism. Inflation remains above the 3% target, constraining monetary easing prospects in the near term.

Market lens

Following the release, the MXN/USD currency pair depreciated by 0.30%, reflecting investor caution. Mexican 2-year government bond yields rose by 12 basis points, signaling increased risk premia. Equity markets showed muted reactions, with the MEXBOL index edging down 0.40% in early trading.

Core macroeconomic indicators provide context for the business confidence decline. Mexico’s GDP growth is projected at 2.10% for 2025, down from 2.50% in 2024, reflecting slower industrial output and export growth. Inflation remains elevated at 4.80% YoY in November, above the central bank’s 3% target. Unemployment holds steady at 3.70%, but wage growth is subdued, limiting consumer purchasing power.

Monetary Policy & Financial Conditions

The Bank of Mexico has raised its benchmark interest rate by 75 basis points since August 2025, reaching 9.25%. This tightening aims to anchor inflation expectations but has increased borrowing costs for businesses. Credit growth slowed to 3.20% YoY in November, down from 4.50% earlier in the year.

Fiscal Policy & Government Budget

Fiscal discipline remains a priority, with the government maintaining a primary surplus target of 0.50% of GDP. Public debt stands at 52% of GDP, stable compared to last year. Infrastructure spending continues but at a measured pace, limiting fiscal stimulus potential.

The chart below illustrates the monthly Business Confidence index from March to December 2025, showing a gradual decline after a mid-year plateau. The downward slope aligns with tightening monetary policy and external headwinds.

Market lens

Immediate reaction: The Mexican peso weakened against the US dollar by 0.30% within the first hour post-release, while 2-year yields rose 12 basis points, reflecting increased risk aversion. The MEXBOL index fell modestly, indicating investor caution.

Looking ahead, Mexico’s business confidence trajectory will hinge on several factors. The baseline scenario (60% probability) anticipates a gradual stabilization around 48.50-49.50 as inflation moderates and monetary policy tightness eases by mid-2026. GDP growth is expected to hover near 2.00-2.30%, supported by steady exports and moderate domestic demand.

The bullish scenario (20% probability) envisions a faster-than-expected inflation decline, enabling rate cuts by late 2026. This could lift confidence above 50, spurring investment and employment gains. Key drivers include improved US demand and easing global trade tensions.

The bearish scenario (20% probability) involves prolonged inflationary pressures, further monetary tightening, and intensified geopolitical risks, pushing confidence below 47. This would risk recessionary dynamics, with weaker credit growth and rising unemployment.

Structural & Long-Run Trends

Mexico’s structural reforms in energy and labor markets continue to support medium-term growth potential. However, demographic shifts and productivity challenges require sustained investment. Business confidence remains sensitive to external shocks, emphasizing the need for policy agility.

In summary, Mexico’s December 2025 Business Confidence reading of 48.40 signals cautious sentiment amid tightening monetary policy and external uncertainties. While core macro indicators remain mixed, the risk of a sharper slowdown persists if inflation and geopolitical risks intensify. Policymakers face the challenge of balancing inflation control with growth support. Market participants should monitor inflation trends, central bank signals, and global developments closely.

Key Markets Likely to React to Business Confidence

Mexico’s business confidence index closely correlates with several financial markets. The MEXBOL equity index reflects domestic corporate sentiment and investment outlook. The MXNUSD currency pair is sensitive to shifts in risk appetite and monetary policy expectations. The AMXL stock, a major Mexican conglomerate, often moves with broader economic sentiment. On the crypto front, BTCUSD can signal risk-on/risk-off moods globally, indirectly impacting emerging market confidence. Lastly, the USDMXN pair inversely tracks MXNUSD, providing additional currency market insight.

Indicator vs. MEXBOL Since 2020

Mini-chart insight: Since 2020, the Business Confidence index and the MEXBOL index have shown a positive correlation of approximately 0.65. Periods of rising confidence typically coincide with MEXBOL rallies, while dips in confidence precede market corrections. This relationship underscores the index’s value as a leading economic sentiment gauge for Mexican equities.

FAQs

What is the current Business Confidence level in Mexico?

The latest reading is 48.40 as of December 2025, indicating cautious business sentiment.

How does Business Confidence affect Mexico’s economy?

It influences investment, hiring, and spending decisions, impacting GDP growth and financial markets.

What factors drive changes in Business Confidence?

Monetary policy, inflation, external shocks, and geopolitical risks are key drivers.

Takeaway: Mexico’s business confidence decline highlights growing caution amid inflation and external risks, warranting close monitoring of policy and market signals.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.