Initial data shows a weak start for the Mexican economy in the fourth quarter of 2024

Preliminary data released Thursday by national statistics institute INEGI suggests that Mexico’s economy may have slowed in October, at the start of the fourth quarter of 2024.

The negative news comes a day before INEGI releases official economic data for September that suggests a decline. INEGI’s revised preliminary report for September, also released this week, forecast a 0.2% contraction in the economy.

If October results are as expected, Mexico could see negative growth for the third month in a row, as the economy contracted 0.3% in August.

Thursday’s preliminary report – referred to by the acronym IOAE – suggests economic activity slowed in October. The decline was barely noticeable at less than 0.1% month-on-month, suggesting the fourth quarter could get off to a slow start

The IOAE report uses the “nowcasting” method to produce estimates of seasonally adjusted economic output and year-on-year variations in GDP. It is important to recognize that the IOAE report only analyzes industry and services. The agricultural sector is not taken into account.

The IOAE report for October found that monthly industrial growth was stagnant and showed almost no growth after a 0.6% increase in the September IOAE report, according to La Jornada newspaper.

The IOAE indicator allows INEGI to quickly estimate economic activity instead of having to wait months for complete reports from each sector. IGAE, on the other hand, is a slower, more accurate measurement based on definitive data.

At the same time, the October report showed no significant monthly changes in the services and trade sectors, after the September IOAE report showed a 0.7% decline.

“The IOAE paints a bleaker picture than the GDP estimates we have seen,” said Julio Santaella, former INEGI director, according to El Economista newspaper.

The IOAE report notes that while there was moderate annual growth compared to August, September and October 2023, this year’s data reflects a decline compared to previous months.

The GDP estimates Santaella was referring to are for 1% growth in the third quarter and 1.5% growth compared to the same period in 2023, according to El Economista.

Analysts at Monex, a Mexican foreign exchange firm, said the IOAE report contrasted with recent consumer confidence surveys, although it was consistent with the latest business sentiment report.

The online publication Animal Político reported that a recent central bank survey of business people found that economic growth expectations had declined. While the Banxico survey showed that the private sector in January expected GDP growth of 2.4% this year, business people surveyed in October only expected growth of 1.4%.

A Monex analyst told El Economista that the release of September’s GDP report and official third-quarter data on Friday will be instructive.

“Attention will focus on the construction sector,” the Monex analyst told El Economista, “especially since several projects have been completed in the public and private sectors.”

With reports from El Economista, La Jornada And Animal policy