Mexican economy drops in Q3-2017 - Wells Fargo

"According to the advance release for Mexican Q3 GDP, the economy contracted 0.2 percent after strong second quarter growth of 0.6 percent. This was the first decline since Q3-2013," explains Wells Fargo Research Team.

Key quotes:

"The weakness in economic activity was more pronounced when looking at the seasonally adjusted, sequential result, which showed the first contraction in economic activity since Q3-2013. According to this measure, the economy contracted 0.2 percent, not annualized in Q3."

"As this is an advanced estimation of Q3 GDP, we do not have any details from the demand side of the economy. However, we do get highly aggregated results from the supply side. From this point of view, primary sector activities’, i.e., agriculture, cattle and fishing, were the only sectors where production improved in Q3, and on a sequential basis, up 0.5 percent. Year over year, this sector was up 0.8 percent, non-seasonally adjusted."

"The tertiary, or service sector, which includes commerce, also declined during the quarter by 0.1 percent. However, the tertiary sector remained as the driving force of the Mexican economy, growing 2.5 percent compared to the same quarter of 2016. The growth in this sector is a clear indication that personal consumption expenditures remained strong during the third quarter even though they probably weakened somewhat compared to the second quarter of the year."

"No Economic Shock for Now, Just a Weakening Trend"

"After the election results in the United States we thought the Mexican economy would suffer a negative shock. We were wrong. However, it is clear that while there was no shock to economic activity, the economy started a slowdown process that has finally triggered the first decline in GDP in four years. We expect this process to continue as news from the NAFTA negotiations continue, and the country prepares for the presidential elections next year."