Mexico’s economic activity YoY rose to 0.70% in November 2025, reversing a three-month decline and outperforming the 0.80% consensus estimate slightly. This follows a sharp contraction of -0.90% in October and a volatile pattern throughout 2025, reflecting external shocks and domestic policy adjustments.

Drivers this month

• Manufacturing output increased by 1.20%, supported by export demand.
• Services sector rebounded modestly with 0.50% growth after prior weakness.
• Construction activity remained subdued, contributing -0.30 percentage points.

Policy pulse

The Bank of Mexico has maintained a cautious stance, keeping the benchmark interest rate steady at 11.25%, balancing inflation pressures near 4.50% against growth concerns. The current economic activity reading supports a neutral monetary policy bias for now.

Market lens

Immediate reaction: The MXN/USD currency pair strengthened by 0.30% within the first hour post-release, reflecting improved growth sentiment. Mexican 2-year government bond yields edged down by 5 basis points, signaling reduced risk premia.

Core macroeconomic indicators provide context for the November print. Inflation remains elevated but stable at 4.50% YoY, while unemployment held steady at 3.90%. Industrial production showed a 0.90% increase YoY, and retail sales rose 1.10%, both supporting the positive economic activity reading.

Historical comparisons

• November 2025’s 0.70% growth contrasts with the -0.90% contraction in October 2025 and -1.10% in September 2025.
• The 12-month average economic activity growth stands at 0.30%, indicating a gradual recovery trend.
• Compared to the 2.50% spike in May 2025, current growth is modest but more sustainable.

Fiscal policy & government budget

Fiscal stimulus remains limited, with the government focusing on budget discipline amid rising debt concerns. The 2025 fiscal deficit is projected at 2.80% of GDP, slightly above the 2.50% target, constraining expansionary fiscal measures.

External shocks & geopolitical risks

Global supply chain disruptions and US trade policy uncertainties continue to weigh on Mexico’s export sectors. However, easing tensions in North American trade relations and stable oil prices provide some relief.

Chart insight

The chart illustrates a volatile but upward-trending economic activity pattern since mid-2025, suggesting tentative stabilization. The recent positive print may signal a turning point if supported by sustained improvements in industrial output and consumer demand.

Market lens

Immediate reaction: Mexican peso (MXN) appreciated 0.30% against the USD, while 2-year yields declined 5 basis points, reflecting improved growth expectations and reduced risk premiums.

Looking ahead, Mexico’s economic activity faces a mix of upside and downside risks. The baseline scenario projects steady growth around 1.00% YoY over the next six months, supported by stable inflation and moderate external demand.

Scenario analysis

• Bullish (30% probability): Stronger US demand and easing supply constraints push growth above 2.00%, boosting investment and exports.
• Base (50% probability): Moderate 1.00% growth sustained by stable domestic demand and cautious fiscal policy.
• Bearish (20% probability): Renewed geopolitical tensions or global slowdown trigger contraction below 0%, with rising unemployment and inflation pressures.

Monetary policy outlook

The Bank of Mexico is likely to maintain its current policy stance in the near term, balancing inflation control with growth support. Any shift will depend on inflation trajectory and external shocks.

Structural & long-run trends

Mexico’s economy continues to grapple with structural challenges including productivity gaps and dependency on US trade. Long-term reforms in education, infrastructure, and innovation remain critical to sustain growth beyond cyclical fluctuations.

November’s 0.70% YoY economic activity growth signals a tentative recovery for Mexico after months of contraction. While volatility persists, the data suggests resilience amid external headwinds and cautious policy settings. Investors and policymakers should watch for sustained improvements in industrial output and consumer demand to confirm a durable turnaround.

Key Markets Likely to React to Economic Activity YoY

Mexico’s economic activity data historically influences several key markets. The Mexican peso (MXNUSD) often reacts to growth surprises, reflecting shifts in capital flows. The iShares MSCI Mexico ETF (EWW) tracks equity market sentiment tied to economic fundamentals. The USDMXN forex pair (USDMXN) is sensitive to trade and growth outlooks. Additionally, the Mexican government bond ETF (MEXBOL) and Bitcoin (BTCUSD) show indirect correlations through risk appetite shifts.

FAQs

What does Mexico’s Economic Activity YoY indicate?

It measures the annual growth rate of Mexico’s overall economic output, reflecting health and momentum.

How does this data affect monetary policy?

Stronger growth may reduce the need for rate hikes, while weakness could prompt easing to support the economy.

Why is the Economic Activity YoY important for investors?

It signals economic trends that influence currency, equity, and bond markets tied to Mexico.

Key takeaway: Mexico’s November 2025 economic activity rebound to 0.70% YoY suggests cautious optimism amid persistent volatility and external risks.

Key Markets Likely to React to Economic Activity YoY

Mexico’s economic activity data is a critical barometer for several financial markets. The Mexican peso (MXNUSD) often moves in response to growth surprises, reflecting shifts in investor confidence. The iShares MSCI Mexico ETF (EWW) captures equity market sentiment linked to economic fundamentals. The USDMXN forex pair (USDMXN) is sensitive to trade and growth outlooks. The Mexican stock index ETF (MEXBOL) reflects broader market trends, while Bitcoin (BTCUSD) often moves with risk appetite shifts influenced by macroeconomic data.