IGAE rebounds in October, keeping services afloat—but Mexico’s industrial sector still hasn’t regained its footing

Mexico’s economy posted a rebound in October after the drop seen in September, according to the Global Indicator of Economic Activity (IGAE) released by INEGI. On a seasonally adjusted basis, the index rose 1.0% from the prior month—an increase larger than what early estimates had suggested and the best monthly performance in several months. Year over year, growth came in at 1.6%, a sign that consumption and services are still providing momentum, though the outlook remains uneven across sectors.

The boost came mainly from tertiary activities (services), which grew 1.2% month over month and 2.5% year over year. Standouts within this category included business support services, professional services, entertainment and cultural activities, health services, and retail trade. This pattern is consistent with an economy in which service-sector employment and everyday consumption continue to underpin much of the growth, even as households face higher borrowing costs and an interest-rate environment that remains elevated by historical standards.

That said, not every part of the services sector moved at the same pace. Activities tied to discretionary spending and certain segments of tourism showed weakness: lodging and food services fell on a year-over-year basis. In today’s context, that could reflect anything from more cautious household demand to a shift in spending toward essential goods and services, along with tougher competition in areas such as restaurants and accommodations.

On the industrial side, October brought partial relief but not a clear trend reversal. Secondary activities increased 0.7% month over month, but were still contracting year over year (-0.7%), extending a multi-month streak of declines. Manufacturing—a key pillar given its link to exports to the United States—fell 1.4% year over year, while mining slipped 0.7% year over year, prolonging a weak trajectory. The exception was construction, which managed 1.5% year-over-year growth after months of declines, in an environment where public investment and certain private projects have partially offset the broader industrial slowdown.

The year-to-date picture is where the cooling signs are most concentrated: the IGAE shows growth of roughly 0.2% year over year, among the lowest readings for a comparable period since the critical phase of 2020. In practical terms, that points to a loss of momentum that has settled in as a weak industrial base, a choppy external market, and consumption that is holding up—but no longer accelerating as it did in earlier phases—combine.

The macro backdrop also helps explain this mix of signals. Mexico has maintained a restrictive monetary stance to contain inflation, making financing more expensive for businesses and households. At the same time, inflation has been easing from the 2022–2023 peaks, though there have still been pockets of pressure in some service categories. On the external front, the U.S. economy—the main destination for Mexican exports—has at times slowed in manufacturing, which typically feeds through to demand for auto parts, electronics, and other goods produced in Mexico, even as the nearshoring trend continues to support long-term investment interest in certain regions.

Heading into year-end, October’s rebound improves the starting point for the fourth quarter, but it doesn’t eliminate the risks: continued manufacturing weakness, volatility in the global trade environment, and business caution in the face of regulatory or public policy changes could limit growth. For 2025, various market analyses point to modest expansion—near rates below 1% in some scenarios—with services as the main support, while industry would need a clearer recovery in external demand and productive investment to deliver a more balanced lift.

In perspective, October’s data confirm that Mexico’s economy can still “bounce” when services strengthen, but they also show that the industrial base remains fragile. If manufacturing doesn’t return to sustained growth, progress will rely too heavily on domestic consumption and the services sector, which could translate into moderate performance and greater vulnerability to external shocks or further tightening in financial conditions.

Final notes: October’s IGAE shows a better-than-expected recovery, driven by services and retail trade, but industry—particularly manufacturing and mining—remains on weak footing. The year-to-date figure reflects a loss of pace that makes it important to closely track investment, the U.S. manufacturing cycle, and the path of rates and inflation—factors that will be decisive in whether 2025 growth becomes more solid or stays constrained.