The Day at a Glance | October 23 2023

The Top

*The IGAE rebounded in August and exceeded expectations.

*The Chicago Federal Reserve’s national activity index showed a recovery in September by logging a 0.2 point reading, up from the previous -0.22, which suggests that the US economy expanded in line with its historical growth trend.

*Israel increased its operations in the West Bank and intensified its attacks in northern Gaza over the weekend. Meanwhile, the US is seeking to delay the Israeli forces’ ground incursion.

*After the forced withdrawal of Jim Jordan, nine new candidates have joined the race for the leadership of the US House of Representatives.

*The Ministry of Finance and Banxico, acting on behalf of the Federal Government, are calling for a government securities swap auction that will take place today, October 23 at 10:30 AM. The operation involves the exchange of Cetes, Bond M, and Udibonos for shorter-term Bond M and Udibonos.

Economic environment

The Global Economic Activity Indicator (IGAE) recorded an acceleration in August and surprised to the upside. After a moderation in its growth rate in July (3.2% y/y), the IGAE recorded an annual 3.7% y/y figure in August. This figure exceeded the 3.5% y/y estimated by market analysts. Similarly, seasonally adjusted figures indicate an annual growth of 3.55%, higher than both the previous 3.46% y/y figure and the 3.4% y/y reported last week by the INEGI´s Timely Economic Activity Indicator (IOAE). On a monthly basis, the growth rate set at 0.39% (vs 0.3% m/m), accelerating from July’s 0.16% m/m, mainly due to a recovery in tertiary activities, which grew 0.29% m/m, following a marginal -0.07% m/m contraction in July. Several figures stood out: a rebound in leisure services (13.8% m/m vs -34.3% m/m prev.), accommodation and food preparation (2.3% m/m vs 0.8% m/m prev.), professional services (2.6% m/m vs -4.8% m/m prev.), and business support services (5.7% m/m vs -4.6% m/m prev.). Primary activities logged a recovery by posting a 2.6% m/m increase from the previous -0.2% m/m figure. However, secondary activities moderated their growth rate to 0.3% m/m due to a monthly contraction in manufacturing (-0.7%), as we mentioned last week. Therefore, annual readings logged 2.7% growth in primary activities, 5.0% in secondary activities, and 2.8% in tertiary activities (vs the 2.5% y/y forecast by IOAE), with IGAE now achieving 30 months of expansionary readings (on the seasonally adjusted series), which demonstrates resiliency in Mexico´s economy even despite a challenging global environment.