The Day at a Glance | September 22 2023

*Inflation continued its downward trend for the ninth consecutive biweekly period. 

*The Global Economic Activity Indicator (IGAE for its acronym in Spanish) recorded a slightly larger slowdown than expected by the Timely Economic Activity Indicator.

*PMI´s in the Eurozone remain in contractionary territory, driven by the largest drop in new orders in almost 3 years.

*PMI´s in the United States show that the services sector is losing momentum and starting to impact the US economy´s performance, with readings of 48.9 points in the manufacturing sector and 50.2 in the services sector.

*US President Joe Biden and his Ukrainian counterpart, Volodymyr Zelensky, met at the White House as the US announced a new support package for Ukraine totaling $128 million in security assistance and $197 million in weaponry and equipment. Additionally, the Pentagon determined that training and support for Ukrainian forces are exempt from the potential government shutdown.

Economic environment

After nine consecutive declines, general inflation in Mexico decreased to 4.48% in the first half of September. This reading, in addition to being lower than the 4.84% figure expected by the consensus, marks the lowest level in two and a half years. On a biweekly basis, a 0.25% figure was logged, which included a 0.27% figure in the core component and a 0.19% reading in the non-core component, with a notable -0.13% drop in energy and government tariffs. With this, the annual figures stood at 5.78% for core prices and 0.48% for non-core prices.

Economic activity moderated its pace of growth in July according to IGAE data. The monthly reading logged a 0.2% increase in July, down from a previous 0.5% m/m figure, driven solely by secondary activities, which moved forward 0.5% m/m, while primary and tertiary activities recorded -0.2% m/m and -0.1% m/m contractions, respectively. With this, the annual IGAE figure decreased to 3.5%, slightly lower than the 3.6% y/y forecasted by the IOAE, with a 4.9% y/y expansion in the secondary sector, 3.5% in the primary sector, and 2.4% in tertiary activities.

PMI´s for the Eurozone show that businesses logged their biggest drop in new orders in almost 3 years. According to September´s PMI data, the private sector remained in contractionary territory at the end of the 3Q23, as fading demand led to a decline in overall activity. The composite PMI decreased from 46.7 points in August to 46.7 in September. The manufacturing sector remained in contractionary territory as it set at 43.4 points (compared to the previous 43.5), marking its lowest point in the last 2 months. On the other hand, even though the services sector remains in contractionary territory as it recorded a 48.4 point reading, it marked its highest level in the last 2 months (compared to the previous 47.9).