Leading indicators point to an acceleration of the economy in Q3 after a weak Q2; activity grew +0.4% m/m in July after contracting -0.1% in June, posting the highest yearly growth in more than a year (+2.8% y/y). We have seen a jump in consumer confidence to a ten-year high in July, mainly owing to the election of president Andrés Manuel Lopez Obrador (AMLO). Retail sales accelerated to +4.2% y/y in July, also reflecting the solid fundamentals of the economy, with record low unemployment (3.3%) and wages growing at their fastest rate since 2008. Inflation shows signs of stabilizing (4.9% y/y in the first half of September, similar to August). On the corporate side, business confidence is high and industrial production accelerated to +1.2% y/y in July. While the outlook for trade improved, some uncertainty still surrounds AMLO’s future policy direction after his inauguration in December.
