Mexico | Manufacturing extends its resilience in May driven by the automotive sector

Summary

The BBVA Manufacturing Multidimensional Indicator grew 2.1% in May (YoY), taking the average year-on-year variation for the first two months of 2Q23 to 2.7%, 0.6 pp below the average registered in the same period of the previous quarter.

Key points

• Key points:
• The May data confirms the gradual slowdown in production, signaling at the same time that the loss of dynamism is materializing more gradually than anticipated.
• According to INEGI data, manufacturing production grew 0.4% MoM in April, driven by the automotive segment; the data for retail sales of vehicles and auto parts in the US showed resilience of the demand for this type of goods (with real growth of 1.3% MoM in May, the highest figure since January).
• In terms of capacity utilization, total manufacturing production stands at a level of 81% as of April, 1.2 pp above the figure registered in the pre-pandemic period (January 2020).
• We anticipate that manufacturing production will gradually lose momentum as tight financing conditions and high interest rates impact demand for durable goods in the US, with a negative effect on the Mexican export sector.

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