Mexico’s industrial production contracted by -2.40% YoY in November 2025, according to the latest data from the Sigmanomics database. This marks an improvement from October’s sharper decline of -3.60%, yet remains below the 12-month average of -1.70%. The sector continues to face headwinds from subdued global demand and domestic challenges.

Drivers this month

• Manufacturing output improved slightly but remained negative, reflecting weak export orders.
• Mining sector showed modest gains, partially offsetting declines in utilities and construction.
• Supply chain disruptions eased but inflationary pressures constrained production costs.

Policy pulse

The Bank of Mexico’s cautious stance aligns with the industrial slowdown. Inflation remains above target at around 4.50%, prompting a steady policy rate near 11.25%. The industrial contraction underscores the challenge of balancing growth with inflation control.

Market lens

Following the release, the MXN/USD pair showed minor appreciation, reflecting relief at the smaller-than-expected contraction. Short-term yields on Mexican government bonds remained stable, while equity markets showed muted volatility.

Industrial production is a core macroeconomic indicator reflecting Mexico’s manufacturing, mining, and utilities output. Its YoY contraction of -2.40% contrasts with the country’s GDP growth forecast of 1.20% for 2025, highlighting sectoral disparities. Inflation at 4.50% remains above the central bank’s 3% target, influencing monetary policy decisions.

Monetary Policy & Financial Conditions

The Bank of Mexico has maintained a restrictive monetary stance, with the benchmark rate steady at 11.25% since mid-2025. Financial conditions remain tight, with credit growth slowing to 3.10% YoY. This environment dampens industrial investment and production expansion.

Fiscal Policy & Government Budget

Fiscal policy remains conservative, with the government targeting a balanced budget. Public investment in infrastructure has increased by 4% YoY but remains insufficient to offset private sector weakness. Limited fiscal stimulus constrains industrial sector recovery.

External Shocks & Geopolitical Risks

Global demand softness, particularly from the US and China, weighs heavily on Mexico’s export-oriented industries. Rising geopolitical tensions in key trade corridors and supply chain uncertainties add downside risks to industrial output.

Drivers this month

• Manufacturing output improved from -4.10% in October to -2.80% in November.
• Mining sector rebounded slightly to 0.50% YoY after a flat September.
• Utilities remained weak at -3.20%, reflecting energy supply constraints.

Policy pulse

The data supports the Bank of Mexico’s decision to maintain rates, as inflation pressures persist despite slowing industrial activity. The cautious monetary stance aims to prevent inflation from becoming entrenched.

Market lens

Immediate reaction: MXN/USD appreciated 0.30% within the first hour post-release, while 2-year Mexican government bond yields held steady near 8.10%. Equity indices showed a mild 0.20% gain, reflecting cautious optimism.

Looking ahead, Mexico’s industrial production faces a mixed outlook shaped by global demand, domestic policies, and structural trends. The following scenarios outline potential trajectories:

Bullish scenario (30% probability)

• Global demand recovers strongly, boosting exports and manufacturing.
• Monetary policy eases moderately as inflation falls below 3.50%.
• Fiscal stimulus accelerates infrastructure investment, supporting industrial growth.
• Industrial production turns positive by mid-2026, reaching 1.50% YoY.

Base scenario (50% probability)

• Global demand remains subdued but stable, limiting export growth.
• Monetary policy remains restrictive to contain inflation near 4%.
• Fiscal policy stays neutral, with modest public investment.
• Industrial production gradually improves but remains slightly negative, around -0.50% YoY through 2026.

Bearish scenario (20% probability)

• Global recession risks materialize, sharply reducing export demand.
• Inflation spikes due to supply shocks, forcing further monetary tightening.
• Fiscal constraints limit government spending, exacerbating industrial weakness.
• Industrial production contracts further to -4% YoY or worse.

Mexico’s industrial production YoY contraction of -2.40% in November 2025 reflects ongoing challenges in the manufacturing and utilities sectors. While the decline eased from October’s -3.60%, the sector remains under pressure from weak external demand and tight domestic financial conditions. Monetary policy is likely to stay restrictive until inflation moderates, while fiscal policy offers limited offsetting support. External shocks and geopolitical risks add uncertainty to the outlook.

Investors and policymakers should monitor global trade dynamics closely, as Mexico’s industrial sector is highly sensitive to US and Chinese economic trends. Structural reforms and targeted fiscal measures could help unlock medium-term growth potential. For now, cautious optimism prevails amid a fragile recovery.

Key tradable symbols linked to Mexico’s industrial production trends include GMEXICOB (Mexican industrial equity), MXNUSD (currency pair reflecting trade flows), BTCUSD (crypto as alternative risk asset), ALFAA.MX (industrial conglomerate stock), and USDMXN (inverse currency pair).