Mexico | Manufacturing will recover, but gradually and with uncertainty along the way

Summary

The BBVA Research Multidimensional Manufacturing Indicator (BBVA MMI) decreased (-)4.8% YoY in January, the tenth consecutive drop since April

Key points

• Key points:
• The most recent data on industrial activity in the US suggests that the manufacturing recovery will materialize more slowly, considering that the production of some manufacturing segments in that country continues to show contractions in year-on-year terms.
• According to INEGI industrial activity figures, manufacturing recorded growth of (-)2.4% YoY in December, bringing the average of the last six months to (-)1.0%.
• Regarding the capacity levels used, as of December, fifteen of the twenty-one subsectors were still below their pre-COVID figure (vs. twelve the previous month).
• We anticipate that the gradual progress that automobile sales are registering in the US (4.4% real YoY on average during the November-January period, vs -0.8% during August-October) will eventually be reflected in increases in production in Mexico.
• We consider that the imposition of tariffs on imports of the sector in the US represents a risk factor for this segment of activity going forward, although we estimate that this event has a low probability of occurrence because it would negatively affect the US automotive sector.

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