Mexican Business Confidence Inches Up in May Amid Persistent Economic Caution

Mexico’s National Institute of Statistics and Geography (INEGI) reported a 0.1-point monthly rise in business confidence to 48.7 in May 2025, halting a four-month decline.

Despite this marginal improvement, the index remains below the 50-point threshold for optimism, reflecting entrenched uncertainty among executives in manufacturing, construction, commerce, and private services.

Annual confidence plummeted 5.9 points, underscoring weakened economic momentum. Manufacturers saw a modest rebound, with their sectoral index climbing 1.2 points to 49.5.

Executives cited slightly brighter investment prospects, though the “time to invest” component lingered at 37.1—far below expansionary levels.

Construction firms faced deeper pessimism, dropping 0.3 points to 46.4, their ninth consecutive month in contraction territory. Current economic assessments in this sector fell 2.3 points, signaling strained project pipelines.

Commerce and services also retreated, with investment readiness in commerce hitting a dismal 23.4. The fragile stabilization follows Mexico’s lackluster 1.8% annual GDP growth in early 2025 and mounting trade risks.

U.S. tariff threats and debates over domestic reforms—including proposed cuts to autonomous agencies—have dampened corporate risk-taking.

BBVA Research notes that formal job creation stagnated in April, with key industrial sectors like manufacturing and construction shedding jobs. Gross fixed investment plunged 6% year-over-year in February, exacerbating hiring freezes.

Regional disparities highlight the uneven impact. Southeastern states like Tabasco and Campeche saw employment drop over 5%, while northern industrial hubs showed relative resilience. Wage growth slowed to 3.7% annually, constrained by stagnant labor demand.

Analysts attribute May’s tentative uptick to temporary export order boosts but warn sustained recovery requires clarity on trade policy and institutional reforms.

With manufacturing confidence at April 2021 lows (48.5) and construction firms entrenched in caution, Mexico’s economic rebound hinges on resolving geopolitical tensions and restoring investor certainty.

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