Economics: News and indicators as of May point to further economic stalling
Revised first quarter GDP data showed the economy sputtering to a 0.6% yoy seasonally adjusted rate of growth while all components of industrial activity contracted during the same period. In most branches of activity, the economic indicators for March and those available for April show a greater deterioration than in the first quarter, despite relatively favorable February numbers. Private consumption is falling along with consumer confidence.
All inflation components rebounded above their 2024 close during the first fortnight of May, led by resurgent non-core prices. This should signal to Banxico that inflation is not yet under control. However, the monetary authority continues to signal its intention to implement another rate cut at its June meeting as it also lowered its GDP growth forecast for 2025 to 0.1%.
The external outlook remains unfavorable given the overall weakness of the US economy and the probable impact of the Trump administration's policies on trade and remittance flows.
In last week’s indicators, the jobless rate for April came in lower than expected but topped the March reading by 3bp. Employment continued to grow, although at less than a tenth of the pace of April 2024, while formal employment was almost flat in yet further evidence of a stalling economy.
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