The Day at a Glance | January 28 2021

The Top

· US GDP records 4% annualized growth in the 4Q20.

· Mexican imports increased 3.43% in December and contracted (-) 9.3% in 2020.

· FED maintains monetary stance and guarantees continued stimulus.

· Economic indicators: Confidence in the European economy decreased in January (91.5 vs 92.4 prev.). Jobless claims moderate in the US (847 thousand vs 875 thousand e.).

Economic environment

The United States grew an annualized 4% in the 4Q20. The latest figures published by the Bureau of Economic Analysis of the US Department of Commerce confirmed a 4% annualized rate of growth in the US economy during the last quarter of 2020. This early figure set slightly below estimates (4.3% e.) and confirmed a slowdown compared to the extraordinary 33.4% recorded in the 3Q20. Fixed investment was the factor that contributed most to growth, with a double digit increase in equipment (24.9%) and residential investment (33.5%). Consumption increased 2.5% (vs 3.1% e.) during the quarter and exports grew 22%, which helped compensate the fall in government spending and investment (-1.2). The strong slowdown in consumption responds to the virus`s impact on spending and employment, while the rebound in house prices helped boost residential investment and construction; simultaneously, the resilience seen in the manufacturing sector forced factories to invest in equipment in order to restore inventories. The economy`s rate of growth maintained levels above the average seen in the last decade, despite showing a slowdown with respect to the 3Q20; a sign that the recovery is still strong and is being boosted by fiscal and monetary stimulus. At an annual rate the contraction in the United States set at (-) 2.5% in the 4Q20 and the average of all 2020 set at (-) 3.5%.

Early trade balance figures published by the INEGI confirmed a continued recovery in imports and exports during December. Imports grew 3.43% during the month (11.5% annual), boosted by an increase in non-oil exports (3.14% monthly, 13.1% annual) and oil exports (10.47% monthly, -14.2% annual). Products exported to the United States increased 13.9%, while exports to the rest of the world improved 9%. With this, total figures for 2020 showed a (-) 9.3% contraction in exports compared to the total volume recorded in 2019. In 2020, oil exports were the most affected (-32.6%), followed by automotive exports (-16.8%); growth was recorded only in extractive (19.7%) and agricultural (4.7%) activities. As for imports, these grew 2.86% in December (3.7% annual), with monthly increases in all types of goods (consumption goods 5.16%; intermediate goods 2.71%; capital goods 1.04%). The contraction in imports during all of 2020 set at (-) 15.8%, with double digit falls in every type of good (consumption -26.2%; intermediate -13.9%; capital -16.9%). Lastly, the trade balance in December closed at a surplus of 4,154 million dollars, while the total trade balance for 2020 closed at a surplus of 34,476 million dollars (vs 5,409 in 2019). The data reflects more of an improvement in the external market over the domestic in the last months of 2020.