The Day at a Glance | January 6 2023

*The US employment report surprised to the upside by logging 223 new jobs in December.

*Inflation in the Eurozone slowed down for a second consecutive month.

*The SHCP presented Omar Mejia Castelazo`s candidacy to be Deputy Governor of the Central Bank of Mexico after Gerardo Esquivel. He is an economist and was an aid for Banxico`s Governing Board in 2019 after being Assistant Treasurer for the Federal Government. His candidacy must be approved by the Senate.

*345,705 formal jobs were lost in Mexico during December (-1.6% monthly) after a total of 752,748 jobs were created throughout 2022, the third largest increase in recorded history.

*Vehicle production in Mexico reached a total of 239,526 in December (+4.4% annual), while exported vehicles set at 243,344 (7% annual).

*Mexico`s leading indicator up to November decreased -0.05 points and set at 99.6, below its long-term trend. October`s indicator set at 101 points after increasing 0.03 points.

*Final Composite PMI`s and Services figures in the US during December were revised upwards slightly – from 44.6 to 45.0 and from 44.4 to 44.7, respectively. However, both indicators remained below November`s levels.

Economic environment

The US labor market remained tight at the end of 2022. The employment report showed that 223 thousand jobs were created in December, exceeding the 200 thousand expected figure. Even though the figure was the lowest since December of 2020, it`s still considerably robust considering the current environment. Moreover, the unemployment rate also surprised by decreasing to 3.5% from 3.7% in November. Wages kept increasing, although they did so more moderately (0.3% monthly vs 0.6% in Nov.). All in all, the labor market continued showing strength, which gives the FED arguments to maintain its restrictive stance, at least throughout the start of 2023.

Inflation in the Eurozone set below 10% for the first time since August. In December, inflation in the Eurozone logged a -0.3% monthly decrease, the second monthly consecutive drop, and set annual inflation at 9.2% (vs 10.0% in November), below the consensus estimate of 9.5%. These figures are mainly explained by a moderation in energy prices, which decreased for a second consecutive month. However, core inflation keeps increasing as it reached a 5.2% annual figure due to goods and services. With this, even though the general inflationary figure kept decreasing, risks remain skewed upwards for the underlying component, which shouldn’t change the ECB`s current outlook. Additionally, on Friday, the Eurozone`s consumer confidence indicator was made known: It logged a -23.9 figure (same as the preliminary figure), its highest level since May and improved with respect to November`s -23.9 figure. However, the overall indicator is still way below its historical average. There was an improvement in the future financial situation of households and in the overall economic situation, which contrasted with a deterioration in the purchase intent indicator.