Mexico's manufacturing sector contracted further in January, according to the latest purchasing managers index (PMI) survey from the finance executive association IMEF.

Both manufacturing and non-manufacturing PMIs decreased for a second month in January, falling deeper into contraction territory. "Mexico's economy began 2025 with no growth at all," said IMEF, "with the outlook made highly uncertain moving forward by US President Donald Trump's first actions in office."

While Trump's proposed tariffs remain on hold, IMEF warned they could severely impact Mexico's economy by further stalling growth and triggering inflation.

The manufacturing PMI dropped to 45.6 from 47.5 in December, marking its tenth consecutive month below the 50-point expansion threshold. Manufacturing, which accounts for about a fifth of Mexico's economy, is led by the auto sector, contributing about 18% of manufacturing GDP.

Within the manufacturing PMI, the new orders index dropped 3.5 points to 42.9, deeper into contraction. Similarly, production fell 3.0 points to 42.8. Employment held at 47.4 in January, now in contraction for 12 consecutive months.

The non-manufacturing PMI — covering services and commerce — declined again, slipping to 49.1 in January from 49.6 in December. New orders dropped 1.9 points to 47.9, production fell 1.4 points to 47.1, and employment held at 48.7.

IMEF further raised concerns over Mexico's trade and services sectors — key drivers of Mexico's post-pandemic recovery — noting a recent loss of momentum. The group added that this may have implications for the non-manufacturing PMI, with its associated sub-components "on the verge of contraction."

By James Young.