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Economic
activity healthy but moderation persists
In September, the monthly indicator for economic activity (IMAE,
Estimador Mensual de Actividad Económica) increased 8.0% over the same
month last year. The September reading was below the 9.3% rise
observed in the prior month but confirmed that economic activity
remained strong through the end of the third quarter. According to
preliminary information based on the monthly figures, growth reached
8.0% in the third quarter over the same quarter last year, which
represented an acceleration over the 7.0% expansion observed the prior
quarter. The Consensus had anticipated a much more moderate
acceleration of 7.1% in the third quarter, given the strong comparison
base last year, when the cyclical recovery was already in full swing.
In seasonally adjusted terms, economic activity actually accelerated
over the prior quarter with growth reaching 2.66%, which was up from the
0.44% registered the prior quarter. Final data for the third
quarter will be published on 16 December.
Industrial
output strong but slowing
More recent data show that robust industrial output has persisted into
the fourth quarter. In October, industrial production increased
7.9% over the same month last year, which was below the 10.8% registered
in the prior month. Aside from tobacco output, all sub-sectors
experienced positive expansions with motor vehicle (+54.0% year-on-year)
and metals (+15.7% yoy) output leading the way. A month-on-month
comparison confirms a moderation in industrial output suggested by the
annual figures, as activity actually dropped 0.10% over the prior month
in seasonally adjusted terms, down from 0.79% growth the previous month.
Construction
remains backbone of economic expansion but deceleration on the rise
In October, construction activity grew a healthy 8.3% over the same
month last year. The October reading was well below the 14.8%
expansion observed the prior month. Road works and oil-related
construction projects registered the strongest growth rates, whereas
activity in housing and infrastructure construction experienced more
moderate growth. The October deceleration confirms the trend to
lower growth, as the variation in the annual average of the construction
activity index shows a steady deceleration in activity since March.
Higher
real incomes and low interest rates sustain robust consumption growth
Supermarket sales data indicate that private consumption remained strong
in the third quarter. In September, real supermarket sales rose
4.7% over the same month last year, which represented an acceleration
compared to the prior month, when activity had grown 3.9%. The
pickup was most pronounced in clothing/textiles, but growth was also
very strong in household electronics sales. A look at the
variation in the annual average of real supermarket sales indicates that
activity picked up with the pace rising from 7.9% in August to 8.1% in
September. However, trade data show that consumption may have
slowed at the beginning of the fourth quarter. In October,
consumer goods imports rose 11.4% over the previous year, which was just
a third of the 32.2% expansion observed in September. In November,
however, the University Torcuato di Tella's (UTDT) consumer confidence
index (ICC) for Buenos Aires rose 8.1 percentage points over the
previous month. Of the surveyed participants, 55.9% anticipate
that the economic situation will improve in the short and medium term,
which was up notably from 51.8% in October. The favourable effect
of declining unemployment and lower interest rates appears to be
providing for a solid backbone for the current expansion in private
consumption.
Growth
to slow as strong comparison base of prior year kicks in
Consensus Forecast participants see the economic expansion moderating
further in the final quarter of the year, as the stronger comparison
base of last year renders achieving the exuberant growth rates observed
in the past quarters more difficult. Consequently, panellists
expect the economic expansion to moderate in the fourth quarter to 5.6%.
Nevertheless, with three solid quarters in the national accounting books,
the annual growth rate will come in strong, with gross domestic product
(GDP) expected to increase 7.5%, which is up 0.4 percentage points from
last month’s forecast and remains well ahead of the government’s
7.0% estimate. Next year, the moderation is likely to persist, as
economic activity will slow further and expand at a lesser 4.5%.
This month’s Consensus Forecast figure, however, is well above the
government’s 4.0% estimate and 0.2 percentage points above last
month’s Consensus Forecast estimate. |
