The Day at a Glance | January 4 2023

*Final figures for US manufacturing confirmed their lowest levels since May of 2020.

*Business confidence in Mexico dropped at the end of 2022.

*Mexico`s government issued two bonds in international markets.

*Mexican automobile sales rebounded in November and set at 120,862; a 24.1% annual increase.

*Despite an upwards adjustment, Composite PMI and services figures in the Eurozone remained in contractionary territory in December: They set at 49.3 and 49.8 points, respectively.

*Boosted by the non-residential sector, spending on construction in the US during December exceeded market expectations by 0.2% monthly.

*The Federal Reserve will make its December 14th meeting minutes known at 1:00pm Mexico City time.

Economic environment

The manufacturing sector kept weakening in December. The US manufacturing sector linked two consecutive months of contractionary figures by setting at 46.2 points in the last month of 2022. Considerable drops were logged in the production and new orders components, which reflected weakness in demand in light of prevailing uncertainty and high prices. With this, as efforts focused on boosting sales, prices barely changed due to the transfer of savings in production costs onto final consumers. Said savings were reached through lower input costs, which softened higher operating expenses and led to the slowest increase in costs since July of 2020. Lastly, the lowest rate of job creation was recorded in 29 months due to the fact that businesses were able to fill positions that had previously been unfilled for a long time. Despite expectations of production rebounding to a three-month high, there is concern among those surveyed regarding the impact of inflation and weak demand on production.

Business confidence once again logged a decrease. December 2022 figures showed that the INEGI`s Business Confidence Survey dropped to 45 points, a 10.7 point decrease compared to the same period of the previous year. At a disaggregated level, all sectors logged decreases, and construction recorded a seventh consecutive month below the 50 point threshold. However, indicators on the country`s future expectations remained above 50 points for construction, trade and manufacturing. In the latter, even monthly increases were recorded.

Big appetite for Mexican bonds. On Wednesday, the Federal Government issued two dollar-denominated bonds – 5 and 12 years – and demand reached 18,400 million dollars, or 4.6 times the issued amount, with the participation of 383 institutional investors. With this, 4,000 million dollars were issued for the 5-year bond, with a 5.40% coupon rate; and 1,250 million dollars for the 12-year bond, with a 6.35% coupon rate.