Mexico’s latest Economic Activity MoM reading for November 2025 registered a contraction of -0.60%, according to the Sigmanomics database. This figure notably undershot the market estimate of -0.10% and reversed October’s 0.60% expansion. The data covers all major economic sectors and reflects activity across the country’s diverse regions.

Drivers this month

• Manufacturing output declined amid weaker export demand.
• Services sector slowed, impacted by subdued domestic consumption.
• Construction activity contracted, reflecting cautious private investment.

Policy pulse

The contraction comes amid a tightening monetary policy stance by Banco de México, which has raised benchmark rates by 125 basis points over the past six months to combat inflation. The current economic activity level remains below the central bank’s neutral growth target, complicating the inflation-growth tradeoff.

Market lens

Immediate reaction: The MXN depreciated 0.40% against the USD within the first hour post-release, while 2-year government bond yields rose by 15 basis points, signaling increased risk aversion and expectations of prolonged monetary tightening.

Examining core macroeconomic indicators alongside the November reading provides context for Mexico’s current growth trajectory. The -0.60% MoM contraction contrasts with the 12-month average growth of 0.10%, highlighting a recent deceleration. Year-on-year growth remains modest, hovering near 1.20%, down from 2.50% a year ago.

Monetary Policy & Financial Conditions

Banco de México’s policy rate now stands at 11.25%, the highest in over a decade. This has tightened financial conditions, with credit growth slowing to 3.50% YoY from 6.20% six months prior. Inflation remains elevated at 5.80%, above the 3% target, limiting room for rate cuts.

Fiscal Policy & Government Budget

Fiscal stimulus remains constrained. The government’s primary balance is near neutral, with limited room for expansionary spending. Public investment grew only 0.30% YoY, insufficient to offset private sector weakness.

External Shocks & Geopolitical Risks

Global trade tensions and slowing US demand weigh on Mexico’s export-oriented manufacturing sector. Additionally, geopolitical uncertainties in Latin America and volatile commodity prices add risk to the outlook.

Historical comparisons show that the current contraction is the steepest since February 2025’s -1.00% drop. The pattern suggests a fragile recovery that is vulnerable to external shocks and domestic policy tightening.

Market lens

Immediate reaction: The MXN/USD exchange rate weakened by 0.40%, while 2-year yields climbed 15 basis points, reflecting market concerns over growth and inflation persistence. Equity indices such as MEXBOL also dipped 0.70% in early trading.

Looking ahead, Mexico’s economic trajectory depends on several key factors including monetary policy, external demand, and fiscal support. We outline three scenarios:

Bullish scenario (20% probability)

• Global demand recovers, boosting exports and manufacturing.
• Monetary policy eases in H2 2026 as inflation moderates.
• Fiscal stimulus increases, supporting investment and consumption.
• Economic Activity MoM rebounds to 0.50% by Q2 2026.

Base scenario (55% probability)

• Moderate global growth with continued US demand softness.
• Monetary policy remains tight but stable.
• Fiscal policy stays neutral with limited stimulus.
• Economic Activity MoM fluctuates around zero, with slow recovery.

Bearish scenario (25% probability)

• External shocks worsen, including trade disruptions and commodity price shocks.
• Inflation remains sticky, forcing further rate hikes.
• Fiscal constraints tighten, reducing government spending.
• Economic Activity MoM contracts further, potentially below -1.00% in early 2026.

Policy pulse

Banco de México faces a delicate balancing act. Persistent inflation and slowing growth complicate decisions. The central bank’s next moves will be critical in shaping the recovery path.

Mexico’s November 2025 Economic Activity MoM contraction signals a pause in growth momentum amid tightening monetary policy and external headwinds. The data from the Sigmanomics database confirms a fragile economic environment with risks skewed to the downside. Market reactions underscore investor caution, with currency depreciation and rising yields.

Structural challenges such as limited fiscal space and geopolitical risks remain key constraints. However, a rebound in global demand or policy easing could provide relief. Close monitoring of upcoming data and policy signals is essential for investors and policymakers alike.

Key Markets Likely to React to Economic Activity MoM

The Mexican peso (MXN) and local government bonds are primary movers following economic activity releases. Additionally, the MEXBOL index tracks domestic economic sentiment closely. On the forex front, the USD/MXN pair reacts swiftly to growth surprises. In the crypto space, BTCUSD often reflects broader risk appetite shifts linked to emerging market data. Lastly, the EURMXN pair also shows sensitivity to Mexico’s economic outlook due to trade and investment ties with Europe.

Indicator vs. MEXBOL Since 2020

FAQs

What does Mexico’s Economic Activity MoM indicate?

It measures the monthly change in overall economic output, signaling short-term growth trends.

Why did November 2025 see a contraction?

Key factors include weaker exports, subdued domestic demand, and tighter monetary policy.

How does this data affect investment decisions?

It influences currency, bond yields, and equity markets by shaping growth and inflation expectations.

Takeaway: Mexico’s economic activity contraction in November 2025 highlights a fragile growth environment amid tightening policies and external risks. Vigilant monitoring and adaptive policy will be crucial for stabilizing momentum.

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