The Day at a Glance | June 5 2023

*Private consumption in Mexico rebounded in March, but gross fixed investment became more moderate. 

*President of the United States Joe Biden signed a bill on Saturday that suspends the debt limit and prevents the US from defaulting on financial obligations. 

*Preliminary results from this weekend´s election give Morena the lead in the State of Mexico and the alliance formed by PAN, PRI and PRD in Coahuila. 

*Consumer confidence in Mexico increased 0.3 percentage points in May, reaching 44.4 points. All five components logged improvements compared to the previous month, although compared to the same month of the previous year, the components related to expectations showed slight deteriorations. 

*The Eurozone´s producer price index declined for a seventh consecutive month in April, with a -32% month to month reading, bringing the annual figure to 1.0%. 

*Investor confidence in the Eurozone for June recorded a larger than expected deterioration. It set at -17.0 points (vs -15.1e. and -13.1 points in May). 

Economic environment

On Monday, the INEGI published March´s private consumption and gross fixed investment data. Consumption rebounded a monthly 0.31% from February´s -0.96%, and was boosted by a strong recovery in imported goods, which increased 3.55% m/m after a significant decline the previous month (-5.62%). With this, the annual reading set at 3.26%. On the other hand, gross fixed investment recorded a slowdown and grew at a monthly 0.46% rate, compared to 1.79% in February. This behavior is explained by the performance observed in the machinery and equipment category, which recorded a 0.26% increase, following a 3.02% figure in February. However, on an annual basis, investment continues growing at a robust pace (8.79%). Overall, demand figures confirm a slowing trend towards the end of the first quarter, although with a healthy pace of expansion. 

On Saturday, June 3^rd, President of the United States Joe Biden signed a bill that ensures that the US government will avoid defaulting on its financial obligations. The agreement to suspend the debt ceiling was reached after tough negotiations revolving around the budget for the next fiscal year. President Biden referred to this agreement as a bipartisan achievement during his speech from the Oval Office on Friday night, where he added that “no one got everything they wanted. But the American people got what they needed”. However, despite dissipating fears of a default scenario, credit rating agency, Fitch Ratings stated that the AAA US debt rating would remain under negative review.

This weekend, elections were held for governorships of the State of Mexico and Coahuila. The quick count points to a victory for Delfina Gómez, the candidate from the “We´ll make history together” coalition (Morena, PT, and PVEM) in the State of Mexico. Meanwhile, in Coahuila, preliminary results point to Manolo Jiménez Salinas of the “Citizen´s Alliance for Safety” (PAN, PRI, PRD) as the winner. It´s worth noting that the district vote counts, which provide the definitive result of an election, will not begin until Wednesday.