In the United States there is still some skepticism and doubts about the impact that the coronavirus will have on the economy; while in Mexico the presence of the virus is not yet confirmed.
Notimex: In the United States there is still some skepticism and doubts about the impact that the coronavirus will have on the economy; the reserve is driven, predominantly, by the domestic market, and to the extent that an epidemic does not develop in the interior of the country, it could remain solid and resistant.
The latest information reflects a fairly robust economy. The number of jobs generated in the country last January surpassed analysts’ estimates and registered 225,000 new jobs (vs. 165,000), according to an Intercam Bank report.
The creation of jobs during January was greater in the construction, health care, transportation and storage sectors, something that several analysts attribute to benign weather conditions during the winter for industries especially sensitive to it.
Manufacturing, meanwhile, lost 12,000 jobs, with 11,000 in the motor vehicle and auto parts sector. The unemployment rate remained virtually unchanged (3.6 percent), and wages accelerated at an annual rate of 3.1 percent, reaching their highest level since November, after a persistent slowdown since February 2019.
In addition, the data support the current monetary stance of the U.S. Federal Reserve System in the short term, which will be able to maintain interest rates at their current levels, provided that a strong labor market and moderate inflationary pressures continue to be seen.
Advanced ISM indicators showed a return to expansion in the manufacturing sector (50.9 vs 47.8 forecast), the first expansion in six months, with widespread growth in production, new orders and employment.
In the non-manufacturing sector, the strength persists: the index accelerated to 55.5 (vs. 54.9 forecast) with mixed readings: production grew (+3.9 to 60.9) and new orders (+0.9, 56.2), although employment (-1.7, 53.1) and export orders fell (-0.9, 50.1).
All in all, the positive news continues in the biggest expansion in the history of the United States. However, the risk of seeing a weak manufacturing sector in the first half of the year is real, with lower external demand and a halt to production at Boeing.
In Mexico, January inflation stood at 3.24 percent for the last 12 months, which meant a rebound from 2.83 percent at the end of 2019. Core inflation also rose to 3.73 percent from 3.59 percent, due to higher commodity prices, mainly from the increase in the Special Tax on Production and Services (STPS) on some products.
Experts believe that annual inflation will continue to rise in the coming months, due to the dynamics of agricultural prices, and expect the underlying component to remain close to these levels in the short term.
Monthly inflation was 0.48 percent, slightly below market expectations, mainly due to lower energy prices and higher fruit and vegetable prices.
Specialists consider possible to incorporate a cut to the reference rate in the next monetary policy meeting of Banxico, although they consider that it will continue to be prudent in its movements.
The economic activity indicators of the Mexican Institute of Finance Executives (IMEF) were also published, which indicate an improvement at the beginning of the year. The manufacturing indicator was at 48.2 points, higher than expected by the market. The improvement is due to a generalized recovery of the sector.
On the other hand, the non-manufacturing indicator registered a greater strength by reaching 50.3 points after eight consecutive months of being in contraction (below 50 points). In general terms, the report was positive, with both indicators rising and above expectations.
They believe that manufacturing may be reflecting less uncertainty due to the ratification of the T-MEC amendments. Next week, investors will be watching the testimony of Fed President Jerome Powell before the U.S. Senate and House of Representatives, where they will be aware of the risks that the central bank may point out in its economic scenario and the possible impact of the coronavirus.
Also to be released is the annual inflation in the United States, where a slight acceleration from 2.3 percent to 2.4 percent is expected. In addition, a review of the Eurozone’s 4Q19 Gross Domestic Product (GDP) is expected to confirm the figure of one percent.
In Mexico, the markets will be attentive to the decision of the Bank of Mexico, where a cut in the reference rate by 25 basis points to 7.00 percent has been fully incorporated.
Although experts continue to expect a cycle of cuts from the agency, they believe it will reaffirm its prudent stance in the face of rising inflation, still high core inflation, and ongoing risks.
Given the environment, they favour investment in medium-term fixed-income instruments, mutual funds that remain invested in government and corporate bonds with good credit ratings.
Economichida 
It is great news, we can realize the economic impact that a disease can have, such as the coronavirus in our country, thank you very much for the information.
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the news was very interesting to me since it can be seen as a virus which is known as coronavirus can affect the market and the economies in the different countries, and how the inflation in these changes.
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It is an interesting news taking into account its reposition of Mexico and the world. In the same way, he realizes that inflation and the empless of Mexico continue to rise and that inflation is fine since a higher range was expected and in the same way it is expected that in these months it grows but it is still not safe.
Good news.
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