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Sunday, March 3, 2024

Some signs of slowdown appear – El Financiero

In recent days we have been seeing indicators that are marking a clear slowdown in economic activity as a whole.

Firstly, we have the employment figures in the IMSS for last January, where an increase of 109.0 thousand new positions created in the formal private sector was reported, which implies a drop of 2.4 percent annually in relation to positions. created in January 2023, which were 111.7 thousand places.

Analyzing the creation of jobs in the last 12 months, a progressive slowdown is clearly perceived. Last January, 648,812 jobs were accumulated, a decrease of 10.2 percent compared to the same period last year and the lowest amount of employment since 2020. This accumulated annual creation is 24.1 percent below the maximum of the year that was in May 2023, which totaled 854,422 (205,000 fewer positions). Even so, the unemployment rate is at 2.8 percent, which is considered full employment, and the average salary grew to 573.4 pesos per day, increasing by 10.4 percent annually, so it is estimated that the wage bill has increased close to 8 annual percent.

Secondly, we highlight the figures from the automotive sector for last January. Automotive production increased by 9.56 percent annually. Exports increased 6.82 percent annually. The domestic automotive market increased by 18.73 percent annually.

Thirdly, we must highlight the disappointing industrial production figures for last December. The industrial sector maintained weak performance due to the contraction in three of its four large sectors.

Seasonally adjusted figures from INEGI showed that industrial activity fell 0.7 percent in December after falling 1.0 percent in November. The most recent result reflected a drop in manufacturing production (-1.2 percent) that was the third continuous, mainly influenced by lower production of clothing and manufacturing of transportation equipment. The construction segment was depressed for the second consecutive month (-0.6 percent) with lower construction work. The production of electricity, gas and water services observed its fifth drop in a row, it was -1.3 percent. On a different note, mining activity rose 1.4 percent due to a strong acceleration in mining-related services. At an annual rate, industrial production expanded 1.2 percent compared to 3.0 percent in November, showing slower growth for the second month. Throughout 2023, industrial activity grew 3.6 percent compared to 5.3 percent in 2022; Inside, construction jumped 15.7 percent and electricity, gas and water advanced 3.6 percent. For its part, mining relaxed its growth to 1.5 percent and manufacturing to 1.0 percent, compared to 2022.

The sales of the chains affiliated to the ANTAD for the month of December, to comparable stores with last year grew 0.5 percent real annual, while in November it grew by 1.0 percent real annual and in October +2.1 percent real annual.

In Mexico, the INEGI gave a preliminary estimate of GDP for the fourth quarter with a growth of 2.4 percent annually, a figure that will most likely be revised upwards in the final data that we will know on February 22. With final figures, in October the IGAE grew 3.7 percent annually, and in November we grew 2.7 percent annually. To have 2.4 percent growth for the entire quarter, growth in December would have to drop to just 1 percent annually, which is unlikely. With our economic indicators Bursametrica (IBAM) estimates a growth of 2.8 percent in the IGAE for December, which would mean that the GDP for the fourth quarter would be 3.0 percent annually, and the GDP for all of 2023 will have grown by 3.3 percent. instead of the preliminary 3.1 percent. This growth range between 3.1 percent and 3.3 percent annually is much higher than the historical average of the last 35 years, of 2.3 percent annually.

Could this slowing trend accelerate in the coming months? The delicate situation that exists in countless cities within the country, where organized crime cartels govern and impose the right to occupancy, and the law of terror, as well as the crisis of insecurity and murders of truck men in The country’s roads, the absence of the rule of law and high corruption are factors that prevent greater economic activity. Add to this the serious lack of medicines, the poor attention of medical services, which makes it difficult for the population to perceive economic achievements. Finally, reform initiatives that threaten autonomous organizations and electoral uncertainty generate greater distrust for investments in the country and put a brake on economic activity.

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