Industrial production (IP) grew 4.8% YoY in July, above our 3.7% forecast and market expectations of 4.0% (as per Bloomberg). The calendar adjusted quarterly annual rate of industrial production rose to 4.7% in July (from 4.0% in 2Q23). At the margin, IP expanded 0.5% mom/sa, driven once again by strong growth in the construction sector (2.0% in July, down from 3.3% and 7.1% in June and May, respectively), while manufacturing output grew by 0.3%. Strong growth in construction is likely associated to the culmination of AMLO’s large infrastructure projects. Industrial production momentum improved, with the qoq/saar at 8.2% in July (from 5.8% in 2Q23) supported mainly by construction output (53.2% in July), while manufacturing production stood at 1.1%.
Our take: Strong growth in the construction sector is likely to continue to fade in 2H23 as it was likely driven by one-off effects of government construction, while manufacturing output should remain relatively soft. Our GDP growth forecast for this year stands at 3.0%.
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Julio Ruiz