Mexico’s economic activity rebounded strongly in July, posting a notable 3.8% growth compared to the same month last year.
This sharp recovery follows a disappointing 0.6% decline in June, exceeding market expectations of just 1.8% growth, according to the Instituto Nacional de Estadistica, Geografia e Informatica.
This marks the highest growth in three months and the third-largest increase in 2024, underscoring the economy’s resilience despite broader challenges.
The impressive performance provides a renewed sense of optimism for Mexico’s economic outlook.
Sectoral growth: agriculture leads the way
A closer look at the data shows that the primary sectors, including agriculture, mining, and fishing, experienced an 11.9% growth in July, reversing a 2.9% decline in June.
Leading this surge was a significant 16.7% rise in agricultural activities, driven by favorable weather conditions and increased demand.
Agriculture remains a crucial contributor to Mexico’s economy, not only ensuring food security but also creating jobs in rural areas.
The sector’s performance highlights its vital role in supporting both local economies and national growth.
The tertiary sector, encompassing services, also reported robust growth, expanding by 4.3% in July compared to a 0.4% contraction in June.
Several industries within this sector experienced significant gains, reflecting rising consumer confidence and spending.
Retail sales surged by 5.4%, while wholesale trade rose by 7.2%. Additionally, professional, scientific, and technical services saw a dramatic 17% increase, suggesting a growing demand for specialized expertise.
This shift towards higher-value services indicates modernization across multiple industries and signals an expanding service-based economy.
Mexico’s secondary industries, including manufacturing, construction, and mining, grew by 2.1% in July after a 0.7% contraction in June.
While this sector’s recovery was less dramatic than agriculture and services, it remains a positive indicator of broader economic stability.
Construction, in particular, posted a 2.6% rise, supported by renewed infrastructure projects and housing demand. However, mining slightly contracted by 0.4%, pointing to ongoing challenges in the sector.
Overall, the modest rebound in secondary industries complements the stronger performances seen in other parts of the economy.
Retail sales contract for the third month
Despite the broader economic recovery, retail sales in Mexico declined for the third consecutive month, falling 0.6% year-on-year in July.
This follows a revised 3.1% drop in June.
The contraction was primarily driven by declines in self-service and department store sales, which fell by 6.2%.
Categories such as textiles, costume jewelry, clothing, and footwear also experienced a 3.1% decline.
However, there was a bright spot: online sales, including those through printed catalogs and television, surged by 33%.
Additionally, grocery and food sales rose by 5.5%, while household goods and computers saw a 4.3% increase.
The stronger-than-expected economic growth gives the Bank of Mexico (Banxico) room to reassess its monetary policy in the coming months.
The robust performance may prompt Banxico to slow its monetary easing efforts, as policymakers balance growth with inflation risks.
With increased consumer demand and spending potentially raising inflationary pressures, Banxico is expected to take a cautious approach to further policy adjustments. The central bank’s decisions will be crucial in steering the economy through this period of recovery while maintaining financial stability.
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