The Day at a Glance | August 11 2023

*Industrial production in Mexico exceeded market expectations as it logged strong annual growth in June. 

*Producer inflation in the US accelerated more than expected in July, with a monthly variation of 0.3% m/m, compared to May’s 0% m/m and the consensus estimate of 0.2% m/m, leading the annual reading to 0.8%. Similarly, core inflation rebounded to 0.3% m/m from June’s -0.1%.

*Credit in China increased less than expected (11.3% y/y), as it logged an annual 11.1% figure. 

*In the US, President Biden requested 24 billion dollars from Congress to aid Ukraine, as well as for other international needs. A showdown with Republicans is expected for its authorization. Additionally, a CNN survey pointed out that 55% of US citizens believe that Congress should not authorize additional support for Ukraine.

Economic environment

Mexico´s industrial sector maintained a healthy pace of growth at the end of the second quarter of 2023. Industrial production figures in June logged an annual 3.66% rate of growth, slightly lower than May’s 3.89%, but higher than the analysts´ consensus 2.8% forecast. Furthermore, when using adjusted figures, industrial production even recorded acceleration in its annual growth rate, increasing from 2.81% in May to 3.59%. This positive performance in its annual reading is partly attributed to a favorable base comparison, but also to the monthly 0.59% rate of growth, which, although it was slower than May’s 0.95% m/m, it still logged greater growth than the average recorded in the previous 17 months (0.25% m/m). The significant rebound in manufacturing stood out as it returned to positive territory with a 0.21% m/m growth rate after having fallen -1.86% m/m in May. However, other components of industrial production reported considerable slowdowns while remaining in positive territory, with mostly solid growth rates. The largest of these slowdowns was logged in construction, which declined from 7.21% in May to 2.19%. Additionally, utilities increased by 0.94%, while mining logged a negligible monthly variation. With this, annual readings appear robust, led by a notable expansion in construction (11.94%). Mining increased by 2.61% y/y, utilities by 3.65% y/y, and manufacturing activities recorded a slight uptick at 0.7% y/y, although 10 out of the 21 constituent industries recorded negative variations. Overall, industrial production figures for June are positive, although they continue to exhibit heterogeneity across sectors. Additionally, monthly readings seem to point to a loss of momentum.