The Day at a Glance | March 26 2021

The Top

*Mexican exports fell during February according to INEGI figures (-3.65% monthly; -1.1% annual).

*Inflation in the US accelerated in line with estimates during February (PCE 1.6% annual); the underlying component increased less than expected (1.5%) and private consumption receded 1%.

*Biden will announce the investment in infrastructure program next week.

*European banks count on enough capital to face the pandemic`s consequences: IMF.

*Record budget approval moves forward in Japan – 106.6 trillion yen; it considers greater spending to fight the pandemic`s effects.

*Mexico surpasses 200 thousand COVID-19 deaths.

Economic environment

Figures published by the INEGI this morning confirmed a 3.65% monthly drop in exports during February. At an annual rate, the contraction set at (-) 1.1%. The largest setback was seen in exports destined for the US, which receded (-) 2.9% during the month, especially regarding automobile exports (-11.6% monthly). It`s possible that exports may have been affected by extreme weather conditions in the US during the second month of the year – while exports to the rest of the world increased 4% during the month. By type of good, manufacturing exports decreased (-) 2.7% at an annual rate while agricultural goods increased 5.9%. Regarding imports, these fell (-) 2.34% during the month (-0.6% annual). What stands out is that imports of consumer goods (-2.52%) and intermediate goods (-3.08%) both recorded a decrease during the month, while capital goods imports increased 5.01%. The total value of exports in February reached 36,189 million dollars, while imports reached 33,508 million; their lowest level since June.

Inflationary data in the United States confirmed a moderate acceleration in prices during February. Inflation, measured by the Personal Consumption Expenditures (PCE), increased 0.2% in the second month of the year, figure below the estimated 0.3%. With this, the inflationary index that is closely followed by the FED set at 1.6%. As for the underlying component, data was weaker as it recorded a 0.1% monthly increase, and 1.4% yearly (vs 1.5% e.). The figures still confirmed a moderate increase in the economy`s prices at the start of 2021. Complementary data published by the Department of Commerce showed that private consumption fell (-) 1% in February and US income fell 7.1%, which makes sense considering the significant increases seen in January, boosted by fiscal stimuli (3.4% and 10.1%, respectively). It`s believed that extreme weather conditions seen during the month were also a contributing factor – after working hours were reduced. Savings fell to 13.6% of disposable income, from the record level of 19.85% reached in January. Income, consumption and savings are all expected to increase during March once the distribution of checks start this week as part of the most recent fiscal package.