Mexico Factory Activity Remains Weak in January

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.

Mexico’s S&P Global Manufacturing PMI fell to 47.3 in November 2025 from 49.5 in October, signalling a sharper deterioration in operating conditions and the lowest reading since June, keeping the index below 50 for a third month. New orders posted a solid decline after three months of growth, with the pace of contraction the fastest since mid-year, while new export orders fell for the twenty-first consecutive month as softer US demand weighed on external sales. Factory output contracted for a seventeenth month and at the steepest pace since May. Firms cut purchases and reduced staff through technical breaks and non-renewed temporary contracts, marking the sharpest job cuts in nearly four years. Finished goods inventories rose as stocks of purchases fell. Input costs increased due to higher freight and material charges, tariffs and adverse exchange rates, while output prices rose only slightly as firms absorbed costs. Business confidence stayed positive but slipped to a three-month low.