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Mexico GDP Q3 2018

Mexico: Mexican economy bounces back in Q3

A comprehensive estimate for growth in the third quarter confirmed the anticipated across-the-board improvement analysts had expected on the heels of this year’s shaky first half. By all measures, the third-quarter reading was upbeat. In annual terms, unadjusted output grew at 2.5% (Q2: +2.6% year-on-year)—a notch below the flash estimate but roughly in line with analysts’ expectations. Meanwhile, seasonally-adjusted quarter-on-quarter numbers rebounded strongly (Q3: +0.8% quarter-on-quarter s.a.; Q2: -0.2% qoq s.a.).

Unadjusted annual figures showed the services sector firmly in the driver’s seat again (Q3: +3.2% year-on-year; Q2: +3.2% yoy), even though its performance was marked down from the flash estimate (previously reported: +3.4% yoy). Despite higher inflation, a post-election bump in consumer sentiment helped deliver gains in the retail sector. Financial sector services, moreover, appeared to benefit from reduced uncertainty in the aftermath of President-elect Andrés Manuel López Obrador’s (AMLO) 1 July win. Meanwhile, industrial-sector output waned somewhat (Q3: +1.1% yoy; Q2: +1.3% yoy) amid weaker manufacturing and construction metrics. Agricultural-sector output, for its part, posted stronger gains than a quarter earlier (Q3: +2.2% yoy; Q2: +1.5% yoy).

Looking ahead to the remainder of the year, analysts at JPMorgan noted:

“The weaker September [GDP proxy] print implies a still solid, but weaker footing going into [the fourth quarter], which combined with the message out of our different tracking tools, signals growth is likely to be weaker than we thought this quarter. […] We also must consider the likely hit to business sentiment from rising political uncertainty, [although] strong U.S. factory output keeps us from expecting a bleaker outcome.”

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