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The real wage bill, main determinant of private consumption, continued to grow at a solid pace.
2023/09/21 | Julio Ruiz

Retail sales rose by 5.1% yoy in July, broadly in line with market expectations of 4.9% (as per Bloomberg) and above our 3.6% forecast. The calendar adjusted quarterly annual rate of retail sales rose to 4.4% in July (from 4.1% in 2Q23). Also using calendar adjusted figures, the real wage bill, the key determinant of private consumption, rose by a solid quarterly annual rate of 9.7% yoy July (from 9.4% in 2Q23), with formal employment growing 3.9% (practically unchanged from 2Q23), while nominal wages increased 11.1% (rom 11.3% in 2Q23). The real wage bill is also supported by lower inflation. Real consumption credit from commercial banks continues to expand at a strong pace (12.2% yoy in quarter ended in July), while remittances converted to pesos fell by 7.0% yoy, dragged by the appreciated currency. At the margin, retail sales expanded at a soft pace of 0.2% mom/sa (after growing at a strong 2.2% in June), but with a positive momentum (qoq/saar at 8.6% in July, from 5.5% in 2Q23).


Our take: Our GDP growth forecast for 2023 stands at 3.0%, but with an upward bias given better than expected activity. Still, we expect the economy to gradually slow during the rest of the year and into 2024 (we expect GDP growth of 1.3% in 2024).


See detailed data below