The Day at a Glance | November 1 2021

The Top

*Scarcity of semiconductors negatively impacts the Mexican automotive sector.

*The Federal Reserve, the Bank of England and the Bank of Australia will hold important monetary policy meetings this week.

*Market rates in Europe record increases and start to take into account a 20bp rise in the ECB`s interest rate for October 2022.

*Crude oil production increased 3.1% in Mexico during September (1.3% annual to 1,665 million daily barrels), according to the NHC.

*The economy is not overheating, inflationary pressures will recede as the pandemic passes; Janet Yellen.

Economic environment

Mexico and North America`s automotive sectors are the most affected due to the scarcity of chips. According to a report published by Bloomberg, auto part suppliers in the Mexican industry have been negatively impacted by the scarcity of chips, which limits the production of automobiles and withholds activity in productive chains at a global level. Manufacturers of engine blocks, transmission boxes, bumpers and fuel tanks have seen an important fall in demand because of less production of automobiles, which has occurred due to the scarcity of semiconductors. It`s estimated that the biggest effects have been seen among assembly chains in the United States, Mexico and Canada, even more so than in other parts of the world. It`s believed that the scarcity of chips could cost the automotive sector up to 210 billion dollars in global sales. General Motors forecasts a 25% drop in sales next year due to the scarcity of semiconductors; while Ford Motor Co. assures that its factories will not operate at 100% capacity until the end of 2022 or start of 2023. This has generated an important fall in the demand of auto parts, greatly affecting the Mexican automotive sector. Companies like Nemak and Metalsa have seen an important drop in their stock`s prices since September as the situation has impacted their sales. Mexico is the world`s fourth largest vehicle exporter, and the automotive manufacturing industry represents close to 25% of the country`s exports. The sector`s weakness could start to cause cuts in the country`s growth forecasts this year