Weekly agenda: Brazil’s unemployment and GDP, Peru’s inflation, Mexico’s Central Bank report

This week, markets will watch for the release of key data for the region’s economy. In Brazil, second quarter GDP figures are expected, which will likely show a solid expansion, according to economists Adriana Dupita and Felipe Hernandez of Bloomberg Economics.

July industrial production and August trade balance data will also be released. In addition, the results of polls from the country’s main pollsters on the presidential race are expected.

Meanwhile, in Mexico, the central bank (Banxico) is expected to reiterate in its quarterly report its commitment to reducing inflation and, therefore, its willingness to continue raising interest rates to achieve that goal.

In Chile, monthly data on economic activity is expected, which could remain above potential.

And in Peru, the August CPI data would likely show that core and non-core prices continue to rise.

BRAZIL

On Wednesday, August 31, the unemployment rate for July is expected. According to Dupita and Hernandez, although slower, labor market indicators likely continued to improve in July.

“We expect the seasonally adjusted unemployment rate to decline to 8.8% from 9.1% in June,” the economists said in a report.

The decline in unemployment would be driven by an increase in jobs rather than a decrease in labor participation.

Second-quarter GDP will be released on Thursday, September 1, showing a substantial expansion and reinforcing expectations for growth of 2% or more this year. Dupita and Hernandez expect agriculture, livestock, and industry to lead second-quarter growth.

The August trade balance will be released on Thursday, which should post a solid surplus. According to Bloomberg Economics, exports were likely up 9% year-over-year, and imports were up 37% compared to daily averages.

July industrial production will be released on Friday, September 2. Declining industrial confidence and auto production would point to a monthly contraction in output. Compared to year-ago levels, Dupita and Hernandez forecast a slight expansion.

CHILE

On Wednesday, August 31, retail sales for July will be released, which probably fell 8.2% from a year earlier. The forecast would imply that sales fell from the previous month following June’s 0.5% decline.

The result would align with rising interest rates, tightening fiscal policy, and tapering stimulus measures. Accelerating inflation and the cumulative depreciation of the peso would also weigh on the data.

On the same day, July industrial production will be released, which may have fallen 1% from a year earlier. “Our forecast points to a small month-on-month advance after 0.5% growth in June,” Dupita and Hernandez noted in their comments.

On Thursday, September 1, the index of economic activity in July is due, which is expected to have likely risen 1.6% from a year earlier. The result would imply a slight month-on-month decline, the fourth in a row, but the activity would still be above its pre-pandemic and potential level.

MEXICO

On Wednesday, August 31, the Central Bank of Mexico’s (Banxico) quarterly inflation report will be released with updated economic projections and a more detailed analysis of the monetary policy outlook.

“We expect the report to have a hawkish tone and emphasize its willingness to continue raising interest rates to achieve its target,” noted Dupita and Hernandez.

PERU

August inflation will be released on September 1, likely down 8.71% from July’s 8.74%; with core and non-core prices continuing to rise from the previous month, base effects would keep inflation relatively stable.

Inflation would remain well above the target ceiling of 2% +/- 1 percentage point.

With information from Bloomberg