GDP surged 6.1% annualized in Q2 after a 2.4% Q1 contraction, driven by agriculture, manufacturing, and services. Inflation slowed, but Banxico held rates at 6.5%.
Alpha Score of 40 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Mexico's economy roared back in the second quarter. GDP grew at a 6.1 percent annualized rate, a sharp reversal from the 2.4 percent contraction in the first quarter, according to preliminary estimates from the Federal Reserve Bank of Dallas. Growth was spread across agriculture, manufacturing, and services, with agricultural output leading at 3.3 percent quarter-over-quarter on a non-annualized basis. Goods-producing sectors–manufacturing, construction, utilities, and mining–rose 1.6 percent, while services expanded 1.5 percent.
Despite the strong quarter, the consensus forecast for 2026 real GDP growth compiled by Banco de México held steady at 1.1 percent. That gap between a single hot quarter and a tepid full-year outlook captures the uncertainty around how much of this bounce is sustainable.
Industrial production, exports, and employment all ticked higher. The three-month moving average of Mexico's industrial production index rose 0.3 percent in May, matching the gain in U.S. industrial production over the same period. Manufacturing IP in Mexico also rose 0.3 percent.
Exports told a similar story. The three-month moving average of total exports rose 1.7 percent in June. Manufacturing exports, which make up the bulk of the trade ledger, climbed 1.9 percent. Oil exports, after bottoming in January, jumped 5.6 percent in June on rising energy prices. Through June, total exports were up 20.0 percent year-over-year, and manufacturing exports gained 21.1 percent. Oil exports lagged, down 7.5 percent versus the same period in 2025.
Retail sales were nearly flat. The smoothed index ticked up 0.1 percent in May after no change in April. Year-over-year, it rose 3.1 percent. The Dallas Fed economists noted that consumption has been driven by rising purchasing power from minimum wage increases and direct government transfers, including universal payments to adults 65 and older.
Formal employment–jobs with government benefits and pensions–rose at an annualized 5.8 percent in June, adding 107,000 positions. That was up from a 1.2 percent increase in May. Year-over-year, formal employment grew 2.0 percent. But total employment, which includes informal sector jobs and covers 60.1 million workers, contracted 0.1 percent year-over-year. The formal-sector unemployment rate ticked up to 2.8 percent from 2.7 percent.
The peso was steady. The currency averaged 17.4 per dollar in June, barely changed from May's 17.3. After a volatile first quarter, the exchange rate has moved little over the last three months.
Inflation continues to ease. Headline CPI grew 3.4 percent year-over-year in June, down from 3.9 percent in May. Core inflation, which strips out food and energy, slowed to 4.0 percent. Services inflation ticked down to 4.5 percent. Banco de México held its benchmark rate at 6.5 percent in August. The central bank expects above-target inflation to persist before returning to its 3.0 percent target by the second quarter of 2027.
Remittances, a critical source of foreign income, continued to soften. The three-month moving average of inflation-adjusted remittances fell 0.8 percent in May after a 1.3 percent decline in April. Through May, remittances were down 0.5 percent versus the same period in 2025. Transfers from the U.S. account for 95 percent of Mexican remittances.
Jesus Cañas, Luis Torres, and Diego Morales-Burnett of the Federal Reserve Bank of Dallas compiled the report.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.