The Day at a Glance | July 31 2023

*The Mexican economy´s growth during the second quarter of the year surprised to the upside.

*The Eurozone’s GDP readings also exceed market forecasts. 

*Inflation in the Eurozone decreased for the third consecutive month to 5.3% y/y, its lowest level in a year and a half; although the core component remained reluctant to decline, and stayed at 5.5% y/y. 

*China’s PMI´s recorded mixed results: The manufacturing indicator continued to recover and marginally exceeded market estimates with a reading of 49.3 points. On the other hand, the non-manufacturing index declined for a fourth consecutive month, reaching 51.5 units, its lowest level this year.

Economic environment

Mexico´s economy linked seven consecutive quarters of growth as it logged still-solid growth (0.9% q/q) in the 2Q23. This growth compares positively against the 0.6% q/q forecasted by analysts and implies a slight deceleration compared to the previous 1.0% q/q. There was homogeneous growth: tertiary activities slowed down from a robust 1.5% q/q in the 1Q23 to 1.0% q/q, while the primary sector rebounded by logging 0.8% q/q growth (-2.8% q/q prev.), accompanied by a slight acceleration in the industrial sector: 0.8% q/q (0.6% q/q prev.). With this, on an annual basis, and based on the original series, GDP growth reached 3.7%, surpassing the 3.2% y/y expected by the analysts’ consensus and maintained its pace of expansion logged in the previous period. Additionally, when considering seasonally adjusted figures, Mexico´s economy grew 3.6% y/y, marginally lower than the readings recorded in the two previous quarters. By industry, figures were similar to the previous quarter, with the primary sector advancing 2.5% y/y (2.9% y/y prev.), secondary activities by 2.6% y/y (2.4% y/y prev,), and the tertiary sector by 4.1% y/y (4.2% y/y prev.). Taking these figures into account, GDP logged a 3.6% rate of expansion during the first half of the year, boosted by all the sectors that comprise it, which proves the Mexican economy´s robustness and resilience even amidst challenging international circumstances, as well as Banxico’s aggressive restrictive cycle.

The Eurozon´s GDP grew by 0.3% q/q during the April-June period, following a flat performance in the first quarter of 2023. This reading slightly exceeded the 0.2% forecasted by the consensus, although these preliminary figures should be taken with some caution as they are mainly attributed to notable increases  in some countries (3.3% q/q in Ireland and 0.5% q/q in France), rather than to homogeneous growth across the monetary block. On an annual basis, the Eurozone´s economy recorded a 0.6% increase, slowing down from the 1.1% y/y recorded in the 1Q23, marking its slowest pace of growth in the past nine quarters. Additionally, and in line with expectations, inflation in the Eurozone fell to 5.3%, its lowest reading since January 2022, following a monthly -0.1% contraction. These positive figures were mitigated by the core component, which remained unchanged at 5.5% (5.4% y/y expected).