Gross fixed investment remains below the level at the beginning of the current administration
Gross Fixed Investment (GFI) grew 6.2% yoy in October (from 3.3% in September), broadly in line with our forecast of 6.3% and above market consensus of 4.5% (as per Bloomberg). Adjusting the figures for working days, GFI grew at a faster pace of 6.4%, taking the quarterly annual rate to 4.8% (from 3.7% in 3Q22). According to the calendar-adjusted breakdown, quarterly annual growth in construction investment stood at a weak -3.8% in October (from -4.3% in 3Q22), while machinery & equipment investment stood at 15.3% (from 14.3%).
GFI momentum improved in October, but it remains 2.7% below the level at the beginning of the current administration. Using seasonally adjusted figures, GFI increased 1.4% mom in October, taking the quarter-over-quarter annualized growth rate (qoq/saar) to 6.1% in October (from 1.0% in 3Q22). Looking at the breakdown, construction investment qoq/saar stood at still low 1.0% in October (from -5.5% in 3Q22), while machinery & equipment investment came in at 9.3% (from 8.4%).
Private consumption expanded sequentially at a soft pace in October, but momentum is still positive. The monthly proxy for private consumption expanded by 5.6% yoy in October (using calendar-adjusted figures), with the quarterly annual growth rate at 6.1% (from 6.3% in 3Q22). At the margin, private consumption expanded at a soft 0.2% mom/sa (from 0.3% in September), taking the qoq/saar figure to 4.2% in October (from 1.9% in 3Q22).
Internal demand is likely to weaken during the last quarter of 2022 and throughout 2023 amid a softer global scenario.