- Mexico: Investment and consumption show mixed signals in July
Gross fixed investment recorded its ninth consecutive annual decline in July, easing from -6.6% to -6.4% in real annual terms. Within its components, machinery and equipment posted the steepest drop at -9.7% (vs. -9.8% previously), remaining in negative territory since January of this year, with a sharper deterioration in the domestic subcomponent (-14.2%) compared to the imported one (-6.4%). Meanwhile, construction continued to soften its downtrend that began in August 2024, falling -3.2% from -3.6% previously. Notably, residential construction surged for the second consecutive month (12.0%), contrasting with non-residential construction (-13.7%), which has posted double-digit declines for the past ten months (since September 2024). As a result, gross fixed investment accumulated a -6.9% drop in the first half of the year. On a seasonally adjusted monthly basis, it fell -1.4% from 1.2% previously, driven by a -1.6% decline in machinery and equipment and a -0.8% drop in construction. Overall, investment trends remain affected by both domestic and international uncertainty, which we expect to persist throughout the year (chart 1).
Private consumption rebounded in July with a 1.6% annual increase, up from -1.1% previously, after five consecutive declines since December 2024. By sector, the strongest growth came from imported goods, which rose to 8.2% (vs. -7.1% previously), following consecutive declines since November 2024. In contrast, domestic goods fell for the second time, from -1.9% to -0.5%. Services moderated their growth, from 2.1% to 1.7%. Despite the rebound, private consumption posted a -0.5% decline in the year-to-date through June. On a seasonally adjusted monthly basis, private consumption rose 0.8% from -0.9% previously, mainly due to a strong rebound in imported goods (4.9%), followed by a modest increase in domestic goods (0.3%), and a decline in services (-0.1%). Looking ahead, we believe the rebound in imported goods was temporary rather than a shift in trend. On the contrary, we expect consumption to remain somewhat weak, due to labour market stagnation and recent declines in remittance inflows (chart 2).
—Rodolfo Mitchell & Miguel Saldaña
DISCLAIMER
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.