Retail sales rose by 2.6% yoy in May (from 3.8% in April), below market expectations (as per Bloomberg) and our forecast – both at 3.5%. Official data adjusted for working days reveals a slightly slower growth of 2.2% yoy, taking the quarterly annual rate to 2.8% (from 5.3% in 1Q23). The real wage bill, the key determinant of private consumption, rose by a solid quarterly annual rate of 8.7% yoy in May (up from 7.2% in 1Q23), with formal employment growing 3.9% (from 3.6%), while nominal wages increased 11.2% (practically unchanged from 1Q23). In turn, the quarterly annual growth rate of consumption credit from commercial banks in real terms stood increased by 11.0% in May (from 9.6% in 1Q23), while remittances converted to pesos fell by 2.3% (from 1.4%).
Sequential retail sales fell by 0.5% mom/sa in May, down from +1.3% in the previous month. The quarter-over-quarter seasonally adjusted annualized rate (qoq/saar) stood at -2.5% (from 0.1% in 1Q23).
Our GDP growth forecast for this year stands at 2.7%, down slightly from 3.0% in 2022. While GDP momentum remains positive in 1H23, we expect activity to slow more clearly during the rest of the year, in line with our expectation of a slowdown in activity in the U.S. economy.