Ir para menu Ir para conteúdo principal Ir para rodapé
We believe the activity cycle is bottoming out in 3Q23.
2023/09/29 | Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra

Retail and mining fell sequentially from July to August, while manufacturing rebounded (likely linked to mining machinery). Real retail sales (including vehicles) fell 0.5% MoM/SA as the adjustment in private consumption continues. In annual terms, retail sales contracted by 9.1% YoY, below Bloomberg market consensus of -8.8% and our -8.3% call; -10.4% in July). On the other hand, manufacturing increased 3.2% MoM/SA, corresponding to a 0.5% YoY increase (-3.8% in July), above the Bloomberg market consensus (-4%) and our -3.8% forecast. Volatile mining fell by 1.3% MoM/SA, leading to an annual increase of 0.2% YoY. As a result, industrial production (grouping manufacturing, mining and utilities) increased 0.8% MoM/SA, leading to a 0.3% YoY rise (1.6% drop in July). Overall, activity data continues to reflect weak private consumption dynamics, yet improving at the margin. For the monthly GDP proxy (IMACEC; to be released on Monday), we expect flat sequential activity dynamics leading to a mild 0.1% YoY increase (+1.8% in July). 


During the rolling-quarter, large activity contractions are moderating. Durable retail sales fell 13.9% YoY (down from the 17.1% fall in 2Q23), while non-durables dropped 9.9% YoY, similar to the fall in 2Q23. Total retail sales fell 10.9% during the quarter (11.5% drop in 2Q23). On the industrial production front, mining increased 0.5% (-2.3% in 2Q), the first positive print since the quarter ending in February. Manufacturing decreased 2.9% (-4.5% in 2Q), thus leading to a total industrial production fall of 1.2% (easing from the 3% contraction in 2Q23). 


Quarterly sequential activity dynamics remain mixed. Manufacturing dropped 1.9% qoq/saar (-7.5% in 1Q23), and mining rose 12.6% qoq/saar, leading to a 4.1% qoq/saar increase for overall industrial production in August. On the other hand, retail sales contracted 12.7% qoq/saar, the sharpest sequential drop since the November quarter last year.


We believe the activity cycle is bottoming out in 3Q23. However, the prolonged contractionary monetary policy, downbeat business sentiment, weakness in China's activity, and tighter global financial conditions should prevent a significant recovery in activity during the rest of this year. We expect a GDP contraction of 0.3% this year, with a mild rebound to 1.8% next year (with risks tilted to the downside).