Mexico | Slow manufacturing dynamism continues in May

Summary

The BBVA Multidimensional Manufacturing Indicator fell (-)1.8% YoY in May (the fifth consecutive drop so far this year), confirming the prolonged slowdown of the sector due to the lower dynamism of external demand for durable goods.

Key points

• Key points:
• Considering May data, the year-over-year change averages (-)1.1% during the first five months of 2024, 3.5 pp below that registered in the same period of 2023.
• The most recent data on retail sales in the US point to lower growth in the sector, while the private consumption indicator in that country shows practically stagnation since January.
• Although the most recent data on industrial activity in the US seem to indicate that manufacturing production in that country has surpassed its lowest point, its evolution towards higher levels of production will be slow during the second half of the year, in an environment of high interest rates and depletion of accumulated household savings.
• Going forward, we anticipate slow dynamism in the sector, as households in the US regularize their spending patterns, in the face of a period of prolonged interest rates and tighter financing conditions. We estimate that progress towards higher levels of production in manufacturing will materialize very gradually towards 2025.

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