The Day at a Glance | January 24 2023

*Inflation in Mexico surprised to the upside in the first half of January.

*PMI´s in the Eurozone returned to expansionary territory.

*In the US, the economy´s leading indicator set at -1.0% in December, a greater contraction than what was expected by the consensus (-0.7%); this is also its tenth consecutive monthly setback. 

*Brazilian and Argentinian presidents, Luiz Inacio Lula da Silva and Alberto Fernandez, announced their intentions of having a common currency with the intention of boosting bilateral trade on Monday; they discarded the possibility of replacing their respective currencies.

*January´s preliminary PMI´s in the US will be made known today.

Economic environment

General inflation set at 7.94% in the first half of January, above the expected 7.85% by the consensus. At a biweekly rate, consumer prices increased 0.46% (vs 0.39%e.). In a disaggregate manner, underlying prices increased 0.44% (vs 0.32%e.), and were still pressured by food, beverage and tobacco prices, which logged a 0.75% biweekly hike – along with an increase in tuition fees (0.35%) and housing (0.30%). These were partially offset by slower increases among goods and non-food merchandise (0.32%) and other services (0.30%). Non-core inflation increased 0.51% due to a hike in energy prices (0.54%) and government-authorized fees (0.87%), which had logged negative figures in the previous biweekly periods. Agricultural goods increased 0.35%. With this, core inflation set at 8.45% (vs 8.32%e.) while the non-core component set at 6.44%.

Preliminary PMI´s in the Eurozone logged improvements in January. After the second half of the year logged figures below the 50 point threshold, both the services and the composite index returned to expansionary territory with January´s figures (50.7 and 50.2, respectively). Both figures exceeded the consensus estimate (50.1e. and 49.8e.). For their part, manufacturing PMI´s logged slight progress, with a 48.8 point figure, above the 48.5 estimated by analysts and the previous 47.8, although it remained in contractionary territory for a seventh consecutive month. Overall, the composite index showed recovery in business confidence for the next twelve months, along with an increase in employment. As for input costs, these have increased more moderately due to improvements in supply chains; however, sale prices for goods and services keep increasing as they are pressured by a rise in wages.