Fynsa
There are surprises and surprises. And we have had them this year: inflation, slowdown, election results, etc.etc. Many of these surprises effectively changed our expectations for the future, made us make other decisions or simply confused us more. Unfortunately, the recent surprise of August's August Imacec does not provide any of that.
In case you missed it, the Central Bank reported that the Imacec for August showed a null variation with respect to the same period of the previous year, which was above our and the market's expectations (-2.0% and -1.5% YoY, respectively).This was above our and the market's expectations (-2.0% and -1.5% YoY, respectively). A surprise of almost two percentage points upward is not minor, especially considering that the most recent data had been systematically disappointing, which affected not only this year's outlook, but also that of next year.. This is doubly relevant, as the seasonally adjusted series showed an increase of 0.6% m/m, breaking four consecutive declines, bringing the growth rate to -5.0% annualized m/m.
Perhaps more than on other occasions, it is relevant to look at the breakdown to find answers to such a surprise, especially considering that the sectoral data published by INE had not only been negative, but even more negative than expected.especially considering that the sectoral data published by INE had not only been negative, but even more negative than expected. Thus, as usual, the Mining Imacec fell by 7.5% YoY, in line with the sectoral index, in line with the sectoral index mentioned above. However, at the margin, it showed no variation, after two months of strong contractions.
However, the non-mining Imacec increased 1.3% YoY, the non-mining Imacec increased 1.3% YoY, mainly influenced by the services sector (4.4% YoY).. The press release indicated that, within this sector, it would have been education services that would have explained the increase, which would seem to us to be transitory in nature. Trade continued its deceleration, falling 10.5% YoY.. In seasonally adjusted terms, the non-mining series increased 0.7% m/m, after four consecutive contractions, also affected by a better performance of education services. This is probably explained by the expansion of the winter vacations during July, which ended up meaning a lower base of comparison for August. As in the year-on-year variation, Trade fell 2.1% m/m in seasonally adjusted terms, representing the fourth consecutive drop, a situation that is likely to continue during the next months, due to the lower liquidity available to households.
Therefore, considering that both year-over-year and in the monthly comparison, the events associated with the good performance of education services in August will not be repeated, we believe that the slowdown trend present in the national economy will continue to be a slowing one..
August's surprise does not even give us the illusion of a possible change in trend or a milder deceleration. Thus, on a preliminary basis we estimate an Imacec variation in September between -2% and -1.5% YoY, becoming, now, the first of a series of negative variations that we forecast could extend until 3Q23 (perhaps with a hiatus in February of the following year). We maintain our projection for the year between 1.5% and 2.0%, while by 2023 GDP would decrease between -1.5% and 0.5%.
