Mexico | Slow manufacturing momentum in December; potential risks from tariffs

The BBVA Research Multidimensional Manufacturing Indicator fell (-)3.3% YoY in December, the ninth consecutive decline since April; considering the December data, the year-on-year change averages (-)2.6% in 2024, 2.7 pp below the figure observed the previous year.

Key points

• Key points:
• The most recent data on industrial activity in the US suggest a gradual improvement in the sector in the coming months, as it recovers from the declines in production resulting from the hurricane season and the strike in the aeronautics sector.
• According to INEGI industrial activity figures, manufacturing registered an average year-on-year growth of 0.1% during the January-November 2024 period, 1.5 pp below that recorded in the same period in 2023.
• Regarding levels of capacity utilization, as of November, twelve of the twenty-one subsectors were still below their pre-COVID figure (vs. eight the previous month).
• We anticipate potential impacts on manufacturing production if tariffs on Mexican imports in the US are imposed; the high level of uncertainty will represent a deterioration in the investment environment, which would add to the rapid deceleration that this variable has registered in recent months.

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