Retail sales and manufacturing surprised to the upside in October. In annual terms, retail sales increased 9.0% yoy in September (+1.5% in the previous month), well above the Bloomberg market consensus of 5.0% and our 4.4% call. Core retail sales (excluding fuels and vehicles), increased 1.3% from September (mom/sa), leading to a 1.6% yoy increase, (null growth in September). Meanwhile, manufacturing increased by 1.5% mom/SA, leading to a 1.1% yoy expansion (-4.1% previously), above the Bloomberg market consensus of -0.2% and our -0.5% call. The data puts an upside bias to our estimate for the monthly activity indicator (+2.6% yoy expansion, to be published on Wednesday 18).
Manufacturing levels improved at the margin. Manufacturing was boosted by sugar production, transport equipment and cleaning products. During the quarter ending October, manufacturing fell 1.6% (-1.4% in 3Q), after dropping 1.6% in 2Q24. At the margin, manufacturing contracted 1.6% qoq/saar (-1.2% in 3Q24).
Retail sales were boosted by vehicle sales and communication equipment. During the quarter ending October, retail sales increased 5.2% yoy (+2.7% in 3Q24), while core retail sales rose by 4.1% (+1.7% in 3Q24). At the margin, core retail sales increased 7.6% qoq/saar (+8.6% qoq/saar in 3Q). Core retail sales now sit 14.4% above pre-pandemic levels (+27% by mid-2022).
Our take: We expect the economy to grow 2.0% this year (0.6% in 2023), and 2.4% next year. Activity indicators suggest the trend of a gradual activity recovery observed in 3Q24 should continue in 4Q24, in line with the Central Bank's expectations. We expect the Central Bank to continue the easing cycle this week with a 50 bp cut.
