Mexico Factory Activity Expands After 14-Month Contraction Streak

The S&P Global Mexico Manufacturing PMI edged up to 47.1 in February 2026 from 46.3 in January, still signaling a marked deterioration in operating conditions. The survey showed a sixth consecutive monthly decline in demand for Mexican goods. New orders fell at a softer rate, while output decreased further, at a pace that was less severe than at the start of the year. New export orders also declined, reflecting weak demand from Europe and the US, though the pace of contraction eased to a three-month low. US tariffs and currency movements were cited as key drivers of higher input costs, with inflation slowing from January but remaining historically elevated. Firms continued to pass costs on to clients, although output price inflation slowed to its weakest rate in a year. Job shedding intensified to a marked pace as firms trimmed headcounts. Meanwhile, business confidence recovered marginally, with firms turning optimistic about the year-ahead outlook after a brief period of pessimism.

The S&P Global Mexico Manufacturing PMI edged up to 46.3 in January 2026 from 46.1 in December, still signaling a marked deterioration in operating conditions. The survey showed a third consecutive monthly decline in demand for Mexican goods. New orders fell at a sharp pace, the fastest since mid-2025, while output contracted significantly, only slightly less severe than at the end of last year. New export orders also declined, reflecting weak demand from the US, though the pace of contraction eased compared to December. Tariffs were cited as a key driver of higher input costs, with inflation accelerating further and remaining well above its long-run average. Firms continued to pass costs on to clients, although output price inflation slowed to its weakest rate in ten months. Job shedding moderated to a three-month low but remained solid. Meanwhile, business confidence weakened, with firms turning pessimistic about the year-ahead outlook for only the second time in over five years.

The S&P Global Mexico Manufacturing PMI fell to 46.1 in December 2025 from 47.3 in November, the sharpest deterioration since April and the fourth month of contraction. New orders declined, with the pace of contraction accelerating to the fastest since June. Export orders also fell, extending the downturn to 22 consecutive months, with the steepest decline since July. Factory output remained on a downward trend amid weak investment, lower sales, and softness in construction and mining, with December posting the most pronounced contraction since April. Despite subdued demand, firms raised selling prices further as cost pressures persisted, with output price inflation reaching the highest level in over a year. Input cost inflation eased to its slowest pace since June but remained above the long-term average. With rising costs and weak demand, manufacturers sharply reduced purchasing activity and continued to cut employment, as existing staffing levels exceeded current production needs.