Decrease in Industrial Operations Continues for Fourth Month in a Row in Mexico
Mexico's Industrial Sector Faces Challenges in First Half of 2025
Mexico's industrial sector has experienced a decline in activity during the first half of 2025, with the mining, construction, and electricity sectors particularly affected.
The mining sector activity decreased by 1.4% in June compared to May, and 8.5% annually. This decline is attributed to continued decreases in employment and output, partly due to the winding down of prior government infrastructure efforts and possible market influences.
The construction sector also saw a decline, with activity dropping by 0.2% in June. This decline is largely due to the conclusion of former President AMLO's mega infrastructure projects, a sharp drop in public investment, and reduced private investment, especially in machinery spending.
Electricity generation, transmission, and distribution also declined by 0.2% in June, constrained by underinvestment and workforce reductions in energy sector jobs.
Trade uncertainty and tariffs imposed by the United States on a range of Mexican goods have also played a role in dampening industrial activity. Thirteen of 21 sub-sectors of the manufacturing industry recorded year-over-year declines in activity in the first half of the year.
However, not all sectors have been affected equally. The manufacturing sector activity in June showed a variation of 0.0% compared to the same month in 2024. Among the eight manufacturing sectors that recorded increases were food production, computer equipment, and electrical appliances.
In a positive development, Mexico added a record 1.26 million formal sector jobs in July. Manufacturing activity increased by 0.3% in June, the only sector whose activity increased on a sequential basis. The construction sector was the only industrial sector to record a year-over-year increase in activity in June, with a 1.5% increase.
Despite these positive signs, the industrial sector as a whole saw a 1.3% annual decline in activity between January and June, the first such decline since 2020. This decline is attributed to a combination of external trade tensions, fiscal tightening, cessation of large-scale public infrastructure investment, declining workforce participation in key sectors, and environmental challenges affecting production and construction activity.
The National Institute of Statistics and Geography (INEGI) reported a decrease of 0.1% in industrial activity compared to May, marking the first month-over-month decline since March. However, it is important to note that state-level variations exist, with some states like Guanajuato and Tamaulipas showing resilience or growth in specific sectors, indicating that the decline is not uniform but driven largely by national macroeconomic and policy factors.
[1] Trade uncertainty and tariffs
[2] Mining, construction, and energy sectors
[3] INEGI report
[4] Weather-related impacts
[5] State-level variations
- The trade uncertainty and tariffs imposed by the United States on a range of Mexican goods have contributed to the dampening of industrial activity in Mexico during the first half of 2025.
- The mining, construction, and energy sectors, including electricity generation, transmission, and distribution, faced a decline in June, which is attributed to continued decreases in employment and output, underinvestment, workforce reductions, and possibly market influences.
- The National Institute of Statistics and Geography (INEGI) reported a decrease of 0.1% in industrial activity compared to May, marking the first month-over-month decline since March. state-level variations exist, with some states like Guanajuato and Tamaulipas showing resilience or growth in specific sectors, indicating that the decline is not uniform but driven largely by national macroeconomic and policy factors.
