The Day at a Glance | February 22 2023

The Top

*Preliminary PMI`s logged progress in February; the services and composite indexes returned to expansionary territory.

*Construction companies in Mexico continued recovering at the end of 2022.

*The sale of previously occupied houses in the US decreased -0.7% monthly in January.

*The Federal Reserve`s meeting minutes will be made public at 1:00pm Mexico City time (from its Feb 1st meeting).

Economic environment

Activity rebounded in the North American private sector during February. Preliminary PMI`s in the US surprised to the upside. Boosted by the services sector, the composite PMI recorded its best reading in eight months, returning to expansionary territory by slightly exceeding the 50-point threshold (50.2). From this overall reading, weak global demand continues to stand out, as evidenced by the drop in the exports category, although it reported its most moderate contraction since May of 2022; with employment remaining strong as an acceleration in job creation was recorded. As for services, its PMI set at 50.5 units, returning to expansionary territory for the first time since June 2022. Beyond this positive figure, we highlight high costs for companies, pressured by higher wages, and which companies seek to pass on to final consumers. Lastly, the manufacturing component remained in contractionary territory for a fourth consecutive month, with a 47.8 point reading, its highest figure in this same period and marked a more moderate setback.

The INEGI published the results of the National Survey of Construction Companies, which logged a 1.8% real monthly increase in the value of production generated by construction companies during December. This result was preceded by a 2.5% monthly increase in November, showing an acceleration at the end of 2022, after experiencing slower momentum during most of the year. With this, on an annual basis, there was a 13.3% increase in the value of production during January, which compares positively with the 5.3% reported in November. However, it should be noted that despite this recent acceleration, levels of production value still lag behind the pre-pandemic period. In a disaggregate manner, the construction of civil engineering sites and buildings recorded accelerations in their annual readings, reporting 24.3% and 4.5% growth rates, respectively – from variations of 6.7% and 2.8% in the same order during November; while specialized work had a lower growth of 7.1% (12% prev.). With this, the value of production generated by construction companies had a 5.1% increase in 2022 compared to the total value logged in 2021. Additionally, the number of employees in the industry continues to recover, although it slowed its pace in the last quarter of the year, reporting a monthly variation of only 0.1% and 4.5% annually; while real average wages in construction companies continue to advance at a steady pace, reporting a monthly 1.9% figure (5.9% annual).