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A rebound in construction sector supported the expansion in industrial production

Julio Ruiz


Industrial production (IP) grew 3.0% yoy in December (from 3.5% in November), above both - our forecast of 2.7% and market expectations of 2.1% (as per Bloomberg). According to figures adjusted by working days, IP expanded at a stronger pace (3.4%), taking the quarterly annual rate to 3.3% in 4Q22 (from 3.5% in 3Q22). Looking at the breakdown, the quarterly annual rate for construction sector stood at 2.6% in 4Q22 (from -3.1% in 3Q22), while manufacturing and mining sectors stood at 4.6% (from 7.1%) and 0.3% (from -0.9%), respectively.

Using seasonally adjusted figures, IP expanded 0.7% mom, driven by a solid expansion in the construction sector (2.7%), while manufacturing output grew at 0.5%. The seasonally adjusted annualized quarter over quarter (qoq/saar) rate of industrial production stood at 2.3% in 4Q22 (from 2.2% in 3Q22), supported by a rebound in the construction sector (13.7%. from -4.7%), although we note it remains 8.7% below the level at the beginning of the administration (December 2018). Manufacturing output stood at weak -1.1% (from 5.2%), consistent with a softer external scenario.

We expect activity to slow this year, to 1.3% (down from the preliminary 2022 GDP growth figure of 3.0%), dragged down by a soft expansion of the U.S. economy and a tighter monetary policy stance.

Julio Ruiz