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Non-mining activity continued to fall at the margin in 4Q22

Andrés Pérez M. & Vittorio Peretti


Sectoral activity data for the final month of 2022 showed sequential gains from November for both industrial production and retail sales. Manufacturing increased 2.2% MoM/SA in December, offsetting the 1.1% drop in November, and leading to a 4.1% YoY fall (-8.0% in November), milder than the Bloomberg market consensus of a 7.1% drop and our 7% call. Meanwhile, mining rose 2.9% MoM/SA, partially reverting the 4% fall in November, resulting in a 1.8% YoY increase (3.2% fall in November), the highest annual pull since April 2021. Overall industrial production (grouping manufacturing, mining and utilities) shrunk 1% YoY (-5.1% in November), the mildest drop since May. On the other hand, retails sales (including vehicles) registered a 1.2% MoM/SA increase, leading to a 11.1% decline over twelve months (15.1% drop in November), milder than the market expectation of -14% and our 13% call. The sectoral data leads us to revise our call to a 1.8% YoY contraction (+60bps) for December monthly GDP monthly proxy (IMACEC; to be released tomorrow).

Activity continued to contract significantly during 4Q22. Durable retail goods sales fell 10.4% YoY during the final quarter (-14% in 3Q), while non-durable goods sales fell 13.5%, deeper than the 12.8% drop in 3Q. Total retail sales fell 12.8% YoY (13.1% down in 3Q). Meanwhile, industrial production fell 3.4% YoY in the quarter (-3.9% in 3Q), with the manufacturing softening (-7.1% YoY versus -4,2% in 3Q) being offset by a lower mining drag (-0.3% YoY; -4.7% in 3Q).

Despite the sequential gains in December, non-mining activity continued to fall at the margin in 4Q22. Manufacturing fell a swifter 11.7% qoq/saar drop (from -4.5% in 3Q), while retail sales contracted 10.5% qoq/saar (-19.7% in 3Q). Total industrial production rose 3.1% qoq/saar (-8.7% in 3Q), boosted by a transitory rebound of mining within the quarter.

We estimate growth of 2.7% for last year, with a 1.1% contraction this year amid slowing global growth, elevated uncertainty and restrictive global financial conditions, in addition to the tight domestic macro policy mix and weak sentiment. The reopening of China and the rebound in copper prices may contain the activity downturn ahead.

Andrés Pérez M.

Vittorio Peretti

Ignacio Martinez Labra