Mexico Factory Activity Slips Into Contraction

Mexico's S&P Global Manufacturing PMI rose to 48.9 in March from 47.1 in February, signaling the slowest contraction in five months. New orders fell for the fifth straight month at a moderate pace, the weakest over this period, as firms cited demand weakness, inflation, US tariffs, and the Middle East war. Export orders declined at their weakest rate in five months, with lower demand from Japan and the US. Production fell at the slowest pace since October. Input costs rose at a six-month high amid tariffs, unfavorable exchange rates, and Middle East tensions, with higher outlays on chemicals, energy, metals, and fuel. Despite intensifying cost pressures, selling prices rose only slightly. Employment fell as firms placed workers on technical breaks and non-renewed contracts. Supply disruptions persisted, with material delays of one to three weeks due to highway blockades and geopolitical tensions.

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.