The Day at a Glance | September 21 2023

*Retail sales in Mexico increased at a more moderate pace in July. 

*Unemployment claims surprised to the downside, signaling that the US labor market could continue to remain tight.

*The Philadelphia Federal Reserve´s manufacturing index recorded greater than expected deterioration in September as it logged a -13.5 point reading, down from a previous 12.0 reading and much lower than the -0.7 expected by the market.

*Automotive companies affected by the strike laid off dozens of workers this week and warned that hundreds more could lose their jobs as the strike continues.

Economic environment

Figures from the Monthly Survey on Retail Businesses show that retail businesses recorded 0.2% growth in revenue during July. This reading is a significant slowdown from the 2.2% m/m growth observed in June after a -0.1 percentage point downward revision. On an annual basis, retail sales recorded a 5.1% annual pace of growth, surpassing the market estimate of 4.9% y/y and set below June’s 5.9% y/y, which was the second-highest reading of 2023 so far. There were strong advances in textile product sales, clothing accessories, and footwear, as well as in self-service and department stores, with annual growth rates of 18.1% and 13.9%, respectively; and a 9.0% increase in grocery store sales, food, beverages, ice, and tobacco. Meanwhile, income among hardware stores, as well as in motor vehicle sales, parts, fuel, and lubricants, decreased by -3.8% y/y and -5.7% y/y, respectively. Despite the “headwinds,” retail sales in Mexico continue to show resilience, reporting their twenty-ninth consecutive month of real annual growth, and even showing an uptick in June and July compared to the less favorable readings observed between March and May, partially due to weak monthly performances.

Unemployment claims in the United States fell to 201,000 during the week ending on September 16^th, marking their lowest level since late January and were significantly less than the 225,000 claims expected by the analysts’ consensus. Consequently, the four-week average declined to 217,000, a seven-month low. In addition, continuing claims dropped by 21,000 to 1.662 million at the end of the week ending on September 9^th, also reaching a low not seen since September 21^st and below the forecasted 1.695 million, indicating that the unemployed population is being able to find employment more easily. Simultaneously, the most recent figures from these indicators provide evidence that the US labor market could continue to remain tight.