The Day at a Glance | June 21 2023

*Aggregate supply and demand in Mexico increased at a 5.3% annual rate during the first quarter of 2023. 

*This Wednesday, Federal Reserve Chair Jerome Powell will testify before US Congress. Beyond any comments made regarding the current state of the economy, special attention will focus on how Powell will explain the pause made in the FED´s most recent decision. 

*China accused US President Joe Biden of making a “political provocation” by referring to Xi Jinping as a dictator. 

*According to the US Mortgage Bankers Association, the number of mortgage applications increased 0.5% in the week ending June 16th. 

*The non-manufacturing index of the Philadelphia Federal Reserve recorded a slight deterioration in June by dropping to -16.6 points (-0.6). 

Economic environment

The INEGI published its quarterly aggregate supply and demand indicators for the 1Q23, which logged an annual 5.3% increase. This figure takes into account a 1.8% quarterly variation in real terms, consisting of a 3.0% q/q hike in gross capital formation, followed by a 2.2% q/q increase in private consumption, which more than offset the -0.4% q/q decline in government consumption. Additionally, exports increased 0.6% during the quarter, while imported goods and services increased 4.5% q/q. On an annual basis, gross fixed capital formation recorded an annual 9.2% figure; private consumption grew 4.5% y/y, and government consumption did the same in 0.7% y/y, while exports decreased -1.4% y/y and imports increased 9.5% y/y. Lastly, on the aggregate demand front, consumption increased its contribution to 49.4% in the 1Q23, followed by exports, which represented 29.7%, gross fixed capital formation (14.6%), and government consumption (7.8%). The remainder is explained by statistical discrepancies (1.0%), as well as changes in inventories (0.3%).