Preliminary data released by the national statistics institute INEGI on Thursday indicate that the Mexican economy may have slowed in October, at the start of the fourth quarter of 2024.

The negative news comes a day before INEGI releases official economic data for September, which is expected to reveal a contraction. INEGI’s revised preliminary report for September – also released this week – forecast a 0.2% contraction in the economy.

If the October results are anything to go by, Mexico could be looking at a third consecutive month of negative growth as August saw an economic contraction of 0.3%.

Thursday’s preliminary report – called the IOAE – suggests that economic activity slowed in October. The contraction was barely noticeable at less than 0.1% month-on-month, suggesting the fourth quarter could be off to a slow start

The IOAE Report uses “nowcasting” methodology to produce estimates of seasonally adjusted economic performance and GDP variation from year to year. It is important to realize that the IOAE report only analyzes industry and services. It does not take into account the agricultural sector.

The IOAE report for October found that monthly industrial growth remained stagnant, showing almost no growth after 0.6% growth in September’s IOAE report, according to La Jornada newspaper.

The IOAE indicator allows INEGI to quickly estimate economic activity, rather than waiting months for full reports from each sector. IGAE, on the other hand, is a slower, more accurate measurement based on completed data.

Meanwhile, the October report showed no significant monthly change in the services and trade sectors after September’s IOAE report indicated a 0.7% decline.

“IOAE paints a gloomier picture than the GDP estimates we’ve seen,” said Julio Santaella, former INEGI director, according to El Economista newspaper.

The IOAE report indicates that while there was moderate annual growth compared to August, September and October 2023, this year’s data reflects a decline compared to previous months.

The GDP estimates Santaella referred to forecast 1% growth in the third quarter and 1.5% growth over the same period in 2023, according to El Economista.

Analysts at Monex, a Mexican currency firm, said the IOAE report contrasted with recent consumer confidence surveysalthough it is in line with the latest business sentiment report.

The online publication Animal Político reported that a recent survey of business people by the central bank showed that expectations for economic growth had fallen. While the Banxico survey showed in January that the private sector expected GDP growth of 2.4% this year, businesspeople polled in October expected only 1.4% growth.

A Monex analyst told El Economista that Friday’s release of both the September GDP report and the official third-quarter data will be revealing.

“Attention will be focused on the construction sector,” the Monex analyst told El Economista, “especially as several public and private projects were completed.

With reports from El Economista, La Jornada and Animal policy