Strategy Outlook

July 24, 2023

The day at a glance  

The Top

*Inflation in Mexico for the first half of July set blow 5%.

*Eurozone PMI´s recorded greater than expected deterioration during June.

*PMI´s logged mixed performance in the US. The manufacturing index exceeded market expectations, although it remained in contractionary territory (49.0); meanwhile, the services index continued to advance, although at a slower pace (52.4).

*In an interview with a news network, Ukrainian Defense Minister Oleskii Reznikov predicted that the war will have ended by next summer, adding that Ukraine is winning this war and will be admitted to NATO.

*High temperatures in the United States are taking a toll on economic activity, increasing business costs and reducing productivity, particularly in sectors such as agriculture and construction. It´s estimated that this could lead to up to $100 billion in annual productivity losses, according to a study carried out by the Adrienne Arsht-Rockefeller Foundation.

Economic environment

Inflation in Mexico fell to 4.79% y/y during the first half of July. This reading shows further progress as it´s down from the previous 5.18% y/y figure, although it remains above the 4.77% y/y forecasted by the consensus. Core inflation stood at 6.76% y/y, while non-core inflation dropped -0.97% y/y.

The Eurozone’s composite PMI fell to its lowest level since November of last year, with a reading of 48.9 points. The services index remained in expansionary territory for a seventh consecutive month, logging a 51.1 points. However, this was slightly lower than both June’s 52.0 and the consensus estimate of 51.5, indicating the slowest pace of expansion in the sector since January of this year. This moderation in growth is due to a decline in new orders and a slowdown in employment creation. Additionally, input costs dropped to their lowest level since May 2021, while selling prices logged their lowest reading since October 2021. On the other hand, the manufacturing index stood at 42.7 points, its lowest level in three years and below the market’s expected 43.5, with its components signaling further declines in the future.