The Day at a Glance | October 29 2021

The Top

*Mexico`s economy contracted (-) 0.2% in the 3Q21 and was affected by the services sector.

*Inflation (PCE) in the United States accelerated to 4.4% annual in October (0.3% monthly); underlying inflation remains at 3.6% annual.

*Inflation in Europe approached record levels in October (4.1% annual vs. 3.8%e.); underlying inflation accelerated to 2.1%, its highest level in two decades.

*Europe`s economy logged 2% quarterly growth in the 3Q21 (3.7% annual).

Economic environment

Mexico`s economy grew less than expected in the 3Q21. According to the first growth estimate published by the INEGI, Mexico`s economy receded (-) 0.2% in the 3Q21, compared to the previous quarter. At an annual rate, growth set at 4.8%, while forecasts estimated a figure above 5%. The quarter over quarter contraction was led by the services sector, which receded (-) 0.6% quarterly, despite a 0.7% rate of growth in the industrial sector and the primary sector. The data suggests that the economy`s recovery after the pandemic became stagnant between July and September, and was affected by an upturn in COVID-19 cases in August, and persistent disruptions among productive chains that limited industrial activity. Jonathan Heath, Deputy Governor of the Central Bank of Mexico, has argued that the services sector`s setback is related to the implementation of the Outsourcing Law. So far this year (Jan.-Sep.), the industrial sector is the one that has recovered the most as it has logged a 9.1% rate of growth compared to the same period of 2020; followed by services (5.4%) and the primary sector (3.1%). This keeps the economy in a trend that will lead it to log a 6% rate of growth in 2021 (6.4% Jan.-Sep.); but if the weakness extends towards the 4Q21, the figures could be revised downwards.