The Day at a Glance | May 16 2023

*Industrial production and retail sales in China logged solid increases in April, although set below consensus estimates. 

*US retail sales rebounded in April, but increased less than expected. 

*US industrial production logged a 0.5% monthly increase in April, driven by surprising positive data in manufacturing and mining. 

*The European Union´s statistical agency, Eurostat, confirmed on Tuesday that growth for the block´s GDP set at 0.1% q/q and 1.3% y/y. 

*The Eurozone´s trade balance logged a 25.6 billion euro (B€) surplus in March – vs a 20 B€ deficit in the same period last year. 

*US President Joe Biden´s meeting with House Speaker Kevin McCarthy is scheduled to start at 1:00pm Mexico City time. 

Economic environment

In April, industrial production in China logged 5.6% annual growth. This is the highest reading since September of last year and marks twelve consecutive months of growth. Said growth came from the manufacturing sector, which saw industries such as electrical machinery and automotive reporting double-digit growth. With this, accumulated figures for the first four months of the year logged a 3.6% increase compared to the same period of 2022. Similarly, retail sales logged solid growth (18.4% y/y), slightly lower than the expected 22.0% y/y, although this is the fastest pace of growth observed since March 2021. Overall, the figures point towards a recovery in China´s economy with respect to 2022, although domestic demand is losing strength. This, coupled with weak global demand, as shown by April´s trade balance figures, reinforces the idea of the need for government stimuli. 

After two consecutive months of negative readings, retail sales in the United States rebounded and logged 0.4% growth. Although this reading is positive, it´s tempered by the fact that it´s lower than the market´s expected 0.8% figure. The recovery in sales was driven by a return to positive variations in automobile sales (+0.4% m/m), construction equipment (+0.5% m/m) and sales in miscellaneous stores (+2.4% m/m), primarily. There was also an acceleration in other sectors such as food and beverage services (restaurants and bars), which increased 0.6% m/m. On the other hand, sales at gasoline stations receded once again, this time by -0.8% m/m, accompanied by a -0.2% decline in food and beverage stores, including a -0.4% m/m decrease in supermarkets. With this, the so-called “core sales”, which exclude transactions at gasoline stores and vehicle sales, recorded 0.6% growth (vs -0.5% m/m in March). This may suggest a revitalization of activity in the United States, boosted by strong wages and a tight labor market, although we should wait to see the effect of credit constraints on consumers. 

US industrial production exceeded expectations in April. After two months of stagnation, the US industrial sector increased 0.5% m/m (vs 0.0%e.), driven by a rebound in manufacturing, which expanded at a rate of 1.0% m/m, from the revised -0.8% m/m in March (originally reported as -0.5%). Similarly, mining activities recovered and logged 0.6% monthly growth after two consecutive months of negative readings. However, utilities declined by -3.1% m/m, after a robust 8.4% monthly rate of growth recorded in March. Lastly, industrial capacity utilization reached a 5-month high (79.7%).