The Day at a Glance | May 2 2023

*Inflation in the Eurozone rebounded to 7% in April, in line with expectations. 

*The US manufacturing ISM moved forward, although it entered contractionary territory. 

*China´s manufacturing PMI entered negative territory for the first time this year. 

*Last week, a national credit rating agency ratified Mexico´s BBB+ rating with a stable outlook. 

*In Mexico, April´s IMEF and manufacturing PMI was made known; remittances corresponding to March were also made public. 

*On Wednesday, Banxico will carry out an auction of Cetes and Bondes F for the purpose of monetary regulation. 

Economic environment

After five consecutive decreases, inflation in the Eurozone accelerated to 7.0%. It was also highlighted that, although the underlying component decreased to 5.6% (the same rate as in February), it remained close to last month´s historical high (5.7%). By category, food, alcohol and tobacco recorded a 13.6% increase and showed slight moderation from the previous 15.5% figure, although it still increasing at fast pace. Additionally, although energy prices decreased -0.8% m/m, on an annual basis, energy rebounded 2.5% from the -0.9% contraction logged in March. On the other hand, service prices continued to increase and reached 5.2% y/y. With this, inflationary figures suggest that the European Central Bank will continue carrying out its increasing cycle in this week´s decision. 

The PMI slightly increased to 47.1 (+0.8), although it remained below the 50-point threshold for a sixth consecutive month. This improvement is attributed to progress logged in the employment sub index (to 50.2 points), along with an increase in the new orders component (to 45.7). However, the price sub index hiked to 53.2 points (from a previous 59.2); in case this persists, it could lead to new inflationary pressures. 

PMI´s in China had mixed performance in April, although showed a slightly negative trend. Chinese PMI´s were made known over the weekend. The manufacturing index entered contractionary territory for the first time in 2023 by logging a 49.2 point figure (51.9 prev.). The setback seen in the manufacturing sector is attributed to an unfavorable base comparison, given the fact that the sector´s performance was very strong during the first quarter of 2022; additionally, foreign demand was weak, as shown by the new orders sub index, which fell to 47.6 points (50.4 in March). For its part, the non-manufacturing index failed to maintain an increasing trend and slightly moderated to 56.2 points (58.2 prev.). Because of this, the composite index fell to 54.4 points (vs 57.0 in March). China´s mixed PMI figures will probably keep pressuring the Government into continuing to carry out its aid policies throughout the second quarter.