Industrial activity in Mexico fell again in September, marking its seventh consecutive monthly decline this year. The National Institute of Statistics and Geography (INEGI) reported the monthly Industrial Activity Index (IMAI) decreased by 3.3% year-on-year and by 0.4% compared to August. The contraction was widespread across all components of the index: construction fell by 7.2% year-on-year, mining by 3.2%, and the generation and supply of electricity, water, and gas by 0.2%, while manufacturing declined by 2.3%. All sectors have been in retreat for several months: mining has seen 27 consecutive months of contraction, utilities for five months, and construction for three. According to Banco Base, the industrial weakness is due to both external and domestic factors. "It is likely that the deterioration in industrial activity will continue, as it is largely associated with the protectionist trade policy of the United States, which has slowed production, particularly in the transportation equipment industry," the bank stated. The body also added that the sector faces structural issues such as lower public investment, a slowdown in infrastructure projects, and economic uncertainty. This presents a negative outlook for Mexico's long-term economic growth. However, a gradual recovery is forecast for the second half of the year, as works on the National Infrastructure Plan and the 'Mexico Plan' promoted by President Claudia Sheinbaum progress. The industrial slowdown also delays the employment target of the 'Mexico Plan' for 2025. In the case of manufacturing, which accounts for about 66% of industrial activity, the contraction was 2.26% year-on-year, the deepest since August 2020. Within this sector, the weakest performance came from the manufacturing of transportation equipment, which fell by 11.67% year-on-year, affected by U.S. tariffs and a semiconductor shortage. Declines were also recorded in the manufacturing of basic metals (-7.3%), the chemical industry (-3.8%), wood products (-10.9%), and the textile sector, where clothing production fell by 10.6%. In construction, the Mexican Chamber of the Construction Industry (CMIC) explained that the decline is mainly due to the contraction in public works. The deterioration is also due to a fall in fixed investment due to the high uncertainty in the country.
