The monthly GDP (IGAE) increased 3.2% yoy in July, below market consensus of 3.6% (as per Bloomberg) but broadly in line with our forecast of 3.3%. The calendar adjusted quarterly annual rate of IGAE rose to 3.6% in July (practically unchanged from 2Q23). At the margin, monthly GDP expanded 0.2% mom/sa driven by a strong growth in construction output (2.0%), while manufacturing expanded at a soft pace of 0.3%. Services, which supported headline activity in 1H23, weakened in July falling by 0.1% mom/sa. Still, momentum in headline and services remains positive, with the qoq/saar at 4.2% in July (from 4.0% in 2Q23) and 2.6% (from 3.3%), respectively. Industrial production remained strong rising by 8.2% qoq/saar in July, driven by construction (associated to the culmination of AMLO’s large infrastructure project), but positive dynamism in the sector is unlikely to persist in 2H23.
Our take: Our GDP growth forecast for 2023 stands at 3.0%. Still, we expect the economy to gradually slow during the rest of the year as momentum in construction and manufacturing fades.
See detailed data below