The Day at a Glance | November 3 2023

*Following a strong performance in September, job creation in the United States showed a noticeable moderation in October.

*In Mexico, demand figures are surprising to the upside. Private consumption recorded an annual 4.1% rate of growth, exceeding the estimate of 4.0% y/y, while the Gross Fixed Capital Formation (GFCF) posted an annual expansion of 32.0%, surpassing the projection of 28.0% y/y.

*This Thursday, the SHCP (Mexican Ministry of Finance) reported that the federal government will allocate 61,313 million pesos for the assistance of the population affected by Otis.

*The unemployment rate in the Eurozone increased to 6.5% in September, contrasting with the expectation that it would remain at 6.4%.

*Vehicle sales in the local market rose by 21.2% in October, equivalent to 112,261 units.

*INEGI (The Mexican Institute of Statistics and Geography) published its system of cyclical indicators, with both indices setting above their long-term trend: The coincident index set at 101.1 points (+0.06), while the leading index remained unchanged at 100.4 points.

Economic environment

The US employment report logged 150,000 new jobs in October. This figure fell short of the 180,000 new positions expected by market analysts and indicates a significant slowdown from the 336,000 positions created in September – which were ultimately revised down to 297,000 as part of the downward revision of 101,000 positions over the previous two months. However, concerning October´s reading, it’s important to consider that the manufacturing sector payrolls dropped by 35,000 positions in the month, primarily reflecting the strike in the North American automotive sector (around 33,000); so, after the agreements reached in the last week, there will be an increase in November´s figures. Additionally, revisions to the average wage recorded a slowdown to 0.2% m/m (vs. 0.3% m/m prev.) and 4.1% y/y (vs. 4.3% prev.), with this annual change being the slowest recorded since mid-2021. Furthermore, the unemployment rate unexpectedly increased from 3.8% to 3.9%, its highest level since January 2022, while the labor force participation rate dropped from 62.8% to 62.7%. Overall, data suggests there was a weakening in the labor market, but to a lesser extent than the 150,000 jobs might suggest, considering that the US economy needs around 100,000 jobs per month to accommodate new workers into the labor market. This threshold was comfortably exceeded in October and the two previous months despite the downward revision. Nevertheless, October´s employment report strengthens the idea that the FED has likely concluded its tightening cycle.