The Day at a Glance | January 20 2023

*Retail sales in Mexico surprised markets by slowing down less than expected in November.

*The timely indicator of economic activity (IOAE for its initials in Spanish) forecasts a 2.7% figure in the Global Economic Activity Indicator (IGAE) during December, and 4.1% for November. This would imply a slowdown with respect to October`s 4.8%. 

*On Thursday, US Secretary of the Treasury, Janet Yellen, informed Congress that the US has reached its debt ceiling, which limits the amount of money it can borrow to pay its financial obligations. Because of this, she called for Congress to come to an agreement as soon as possible so the US avoids going into default, which would bring catastrophic consequences, according to Yellen.

*Kristalina Georgieva, Managing Director of the International Monetary Fund, stated that the global economy`s outlook is less negative than it was a few months ago. The IMF forecasts 4.4% growth in China in 2023, and a 2.7% rate for global growth. However, it pointed out that the war in Ukraine is still a “huge risk” for European sentiment.

Economic environment

Retail sales logged a -0.2% monthly decrease, slightly lighter than the -0.3% expected by the consensus. However, at an annual rate, it logged a 2.4% figure, which was boosted by a low base comparison and recorded a more moderate figure after October`s 3.8%. In a disaggregate manner, the largest drop was logged in hardware, iron shop and glass (-7.6%) sales; the sale of groceries, food, beverages, ice and tobacco decreased -1.6%. For their part, stationary and leisure activities logged an 8.8% increase, followed by motor vehicle sales, spare parts and fuel (4.9%), and self-service and department stores recorded a 3.4% hike. Overall, retail sales set above pre-pandemic levels for the greater part of the year; however, it`s worth pointing out that the slowing trend in growth has been seen since August, which points towards a weakening in the domestic market towards the end of the year in light of the restrictive monetary policy and weaker purchasing power among households because of inflation.