Preliminary data released Thursday by the national statistics institute INEGI 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 publishes official economic data for September, which is expected to reveal a contraction. INEGI’s revised preliminary report for September – also published this week – predicts a 0.2% contraction in the economy.

If October’s results play out as indicated, Mexico could be looking at a third consecutive month of negative growth as August saw its economy contract by 0.3%.

Thursday’s preliminary report – referred to by its acronym IOAE – suggests that economic activity slowed in October. The contraction was barely perceptible at less than 0.1 percent from the previous 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 year-to-year GDP changes. It is important to recognize that the IOAE report only looks at industry and services. It does not consider the agricultural sector.

The IOAE report for October found that monthly industrial growth remained stagnant, with almost no growth after a 0.6 percent rise 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 and more accurate measurement based on completed data.

At the same time, the October report showed no significant monthly change in the services and trade sectors, after September’s IOAE report indicated a contraction of 0.7%.

“IOAE presents a more bleak picture than the GDP estimates we have seen,” said Julio Santaella, former director of INEGI, 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 contraction compared to previous months.

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

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

Online publication Animal Político reported that a recent central bank survey of business people found that expectations of economic growth had fallen. While the Banxico survey found that in January the private sector anticipated GDP growth of 2.4% this year, businesspeople polled in October expected growth of just 1.4%.

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

“The focus will be on the construction sector,” the Monex analyst told El Economista, “especially since several projects in the public and private sectors have been completed.

With reports from The Economist, La Jornada and Political Animal