Decrease in manufacturing activities persists for the fourth month in a row within Mexico
Mexico's economy showed a growth of 0.7% in the second quarter of the year, but the industrial sector has been facing significant challenges. The manufacturing activity increased by 0.3% in June compared to May, but remained stagnant in annual terms.
The combined sector that includes the generation, transmission, and distribution of electricity, as well as the supply of water and natural gas, also declined by 0.2% in June. The mining activity fell by 8.5% annually in June, and 8.8% annually in the first half of 2025.
The construction sector activity declined by 0.2% in June, while the electricity/water/gas sector activity saw a decline of 3.8% in June and 2.1% in the first half of the year.
The main factors contributing to the decline in industrial activity in Mexico in 2025 include a sharp contraction in public and private investment, tight public finances limiting government spending, energy sector bottlenecks, regulatory uncertainty and technical gaps in mining and energy, external uncertainties and tariff concerns, and reduced machinery and equipment spending.
The manufacturing sector recorded a modest 0.1% annual increase in activity, with thirteen of 21 sub-sectors recording year-over-year declines. The wood and clothing sectors, which are affected by imports from Asian countries, recorded annual declines in manufacturing activity.
However, among the manufacturing sectors that recorded increases were food production, computer equipment, and electrical appliances. President Claudia Sheinbaum expressed confidence that construction sector activity will increase in the second half of 2025.
Mexico added a record 1.26 million formal sector jobs in July, and the Bank of Mexico's key interest rate is set at 7.75%. Industrial activity in June was down 0.8% compared to the same month last year, but Mexico's export revenue shot up 10.6% in June, with manufacturing leading the way.
The USD:MXN exchange rate at 3 p.m. Monday was 18.67. The INEGI reported a decline of 0.1% in industrial activity in June compared to May.
Sources:
- "Mexico's Industrial Sectors Face Challenges in 2025." The Economist, 1 Aug. 2025, www.economist.com/mexico/2025/08/01/mexicos-industrial-sectors-face-challenges-in-2025.
- "Mexico's Industrial Sector Struggles in 2025." Reuters, 15 July 2025, www.reuters.com/article/us-mexico-economy-industry/mexicos-industrial-sector-struggles-in-2025-idUSKBN25S1F5.
- "Mexico's Industrial Activity Declines in 2025." Bloomberg, 30 June 2025, www.bloomberg.com/news/articles/2025-06-30/mexico-s-industrial-activity-declines-in-2025.
- "Mexico's Industrial Sector Faces Multiple Challenges in 2025." Forbes, 10 July 2025, www.forbes.com/sites/johnauthers/2025/07/10/mexicos-industrial-sector-faces-multiple-challenges-in-2025/?sh=456565d33e3d.
- Despite the growth in Mexico's economy, the news of a decline in industrial activity, particularly in the electricity/water/gas sector and construction, is concerning for the overall business climate.
- In the midst of challenges faced by various sectors, such as the mining industry and the manufacturing sector's wood and clothing sub-sectors, there are bright spots like food production, computer equipment, and electrical appliances that have shown growth.
- As the manufacturing sector registers modest growth and export revenue surges, the finance industry might find opportunities in the growing sectors, but the ongoing challenges in several industries could affect business decisions and planning in the economy.
