Mexico Breaks Remittance Records with an Influx of Cash

Mexico's remittances hit a record high of $5.7 billion in May, boosting the economy. The manufacturing sector shows growth, while business confidence moderates. Nearshoring investments reach $42 billion. ExxonMobil dominates the private fuel market. CFMoto starts production in Nuevo León and more.

Mexico Breaks Remittance Records with an Influx of Cash
Mexican emittances reach a record high, injecting a boost into the country's economy.

Mexico continues to reap the benefits of remittances from abroad, as the country received a staggering $5.7 billion in May alone, setting a new record. This figure represents a remarkable 10.72 percent increase compared to the same period last year, marking 37 consecutive months of annual growth. These findings, based on data from the Bank of Mexico (Banxico), highlight the robust performance of remittances, driven by higher transaction volumes and larger remittance sizes.

In May, Mexico recorded 14.55 million remittance transactions, reflecting a 7.36 percent increase year-on-year. Moreover, the average value of money transfers rose to $391, a 3.17 percent uptick from the previous year. In the period from January to May, Mexico received a historic total of $24.7 billion in remittances, surpassing the figures from the same period in 2022 by 10.26 percent. With seasonally adjusted data, remittances increased by 0.19 percent every month, reaching an impressive $25.9 billion in the accumulated January-May period, representing a 10.13 percent growth compared to the previous year.

Notably, the number of remittance transactions during the first five months of 2023 reached an unprecedented 64.19 million, reflecting a significant 9.58 percent annual growth. These statistics underline the significance of remittances for the Mexican economy, with 95.99 percent of the funds originating from the United States.

Manufacturing Sector Shows Steady Growth, But Business Confidence Moderates

The Mexican manufacturing sector displayed resilience as the Manufacturing Orders Indicator (MPI) rose by 0.22 points in June, reaching 53.83 units, marking its second consecutive monthly increase. However, the expected volume of production experienced a slight setback, dropping by 0.56 points. While this dip slowed down the MPI's momentum, it didn't prevent the indicator from maintaining a six-month streak above the 50-point threshold. Other components of the MPI showed positive trends, including a 0.56-point increase in input inventories, a 0.32-point rise in the expected volume of orders, a 0.28-point improvement in the expected delivery of inputs by suppliers, and a 0.20-point boost in the expected levels of employed personnel.

On the other hand, three out of the five components of the Business Confidence Indicator (BCI) for the manufacturing sector experienced a decline. The company's current economic situation dropped by 0.98 points, the country's current economic situation decreased by 0.55 points, and the future economic situation declined by 0.43 points. However, the right time to invest component showed a positive trend, increasing by 1.06 points. Overall, the Economic Confidence Indicator (ECI) decreased marginally by 0.10 points in June, reaching 53.31 units. Despite this slight dip, the ECI maintained a streak of 25 consecutive months above the 50-point threshold.

Nearshoring Investments Surge in Mexico, Reinforcing Relocation Trend

Mexico's appeal as a nearshoring destination has been further solidified, with nearshoring investments totaling approximately $42 billion in the first half of this year, primarily focused on expanding production capacity. According to BBVA's analysis titled "Nearshoring: How is nearshoring going? A first summary," the figure includes significant investments such as Mexico Pacific Limited's $14 billion announcement to develop a liquefied natural gas export facility and a gas pipeline in Sonora. The report highlights that while there are projects related to water and energy management, the majority of investments entail expanding or modernizing existing production capacities in the automotive industry. Notable investments include Jetour's $3 billion for an electric vehicle plant in Aguascalientes, Mercado Libre's $1.6 billion for logistics infrastructure, Tarafert's $1.5 billion in Durango, and Constellation Brands' $1.3 billion in Veracruz. BBVA emphasizes that this influx of investment confirms the materialization of the relocation trend in Mexico.

ExxonMobil Dominates Mexico's Private Fuel Market

Since the opening of the gas market in 2017, ExxonMobil has emerged as the leading company with the most service stations under a private brand in Mexico. Out of the 13,500 stations operating in the country, 579 operate under the Mobil brand, with a presence in 21 states. When including Pemex, which solely owns 8,365 stations, ExxonMobil's impact becomes even more significant. Over the past five years, the company has imported more than 100 million barrels of fuel into Mexico. Looking ahead, ExxonMobil aims to expand its reach to 600 service stations shortly, as stated by Nicolas Lleras, the company's fuels director. This expansion demonstrates ExxonMobil's commitment to the Mexican market and its determination to strengthen its presence in the country.

CFMoto Begins Production in Nuevo León, Enhancing Manufacturing Ecosystem

The renowned Chinese company CFMoto is gearing up to commence production in Apodaca, Nuevo León. CFMoto is a global enterprise known for producing motorcycles, all-terrain vehicles, and other sports vehicles. Choosing the state of Nuevo León for its operations, CFMoto Mexico Power aims to establish a manufacturing presence with the potential for future expansion. While specific details regarding the production type and units are yet to be disclosed, the company's directors are expected to provide further information in the coming days. CFMoto, founded in China in 1989, competes with industry giants like Polaris, a U.S.-based company that also operates a manufacturing plant in Apodaca. With CFMoto's production plant, the state of Nuevo León is witnessing the emergence of a manufacturing ecosystem for this type of vehicle, bolstered by the presence of foreign companies.

ZF Expands Electromobility Operations in Guadalupe Industrial Park

Germany's ZF is expanding its operations in the Finsa Guadalupe Industrial Park to cater to the growing demand for intelligent components in the electromobility sector. Just over a year since its plant's inauguration in May 2022, dedicated to manufacturing advanced electronic and assisted driving components for passenger vehicles, ZF is further strengthening its position in the industry by expanding its operations. This move reflects ZF's commitment to providing cutting-edge technology and improved safety solutions for the evolving automotive landscape.

Railroad Companies Forge Synergies to Create Freight Corridor

Several companies in the United States have joined forces to establish a freight corridor connecting Texas with the southeastern region of the United States and Mexico. In a collaborative effort, CSX Corporation, Canadian Pacific Kansas City (CPKC), and Genesse & Wyoming (G&W) railways have agreed to acquire and operate certain sections of the Meridian & Bigbee Railroad, a G&W railway. This strategic move will enable CSX and CPKC to offer additional shipping options to intermodal, automotive, and other customers by establishing an efficient corridor that links expanding markets in Mexico, Texas, and the southeastern United States. The agreement outlines CPKC's acquisition and operation of the Meridian & Bigbee Railroad segment between Meridian and Myrtlewood, Alabama, while CSX will assume control of the lines east of Myrtlewood. Although financial details were not disclosed, this collaboration sets the stage for enhanced transportation infrastructure and greater connectivity in the region.