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Mexico’s Timely Indicator of Private Consumption points to monthly growth of 0.2% in July and just 0.1% in August. On a year-over-year basis, consumption is estimated to have increased 1.6% and 0.9%, respectively. The figures suggest a loss of momentum toward the end of the summer, although the wide confidence intervals still leave room for significant revisions.

Our Take The estimates suggest that private consumption continues to grow, but at an increasingly moderate pace. August’s marginal monthly increase and the year-over-year slowdown point to more cautious households amid a weak labor market, still-elevated interest rates and lower confidence.

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U.S. retail sales rose 1.2% month over month in August, above the 0.7% expected, after declining 0.5% in July. Excluding gasoline, sales advanced 1.1%, while the control group, used to calculate the consumption component of GDP, grew 1.4%. The increase was driven by online sales, electronics and food services.

Our Take The strength of U.S. retail sales confirms that consumption retains enough momentum to support economic growth, even amid elevated prices and borrowing costs. However, resilient demand could also make it harder for inflation to moderate, meaning the data support the Fed’s restrictive stance and raise the likelihood of another rate hike this year.

The Bank of England kept its benchmark rate unchanged at 3.75% in a six-to-three vote, with the minority favoring a 25-basis-point increase. The decision to pause reflected its intention to assess whether the energy shock is beginning to feed through to prices and wages, although the central bank warned that inflation, which stood at 3.1% in August, could exceed 4% in early 2027. It also slowed the pace of bond sales to avoid placing additional pressure on the debt market.

Our Take The decision represents a hawkish pause. The persistence of the conflict in the Middle East and elevated energy prices increases the likelihood of a rate hike in November or December, particularly if second-round effects emerge. This would keep borrowing costs high for households and businesses, although the slower pace of balance-sheet runoff could partially ease pressure on long-term yields.

U.S. initial jobless claims fell by 10,000 to 196,000 in the week ended September 12, their lowest level since July. The four-week moving average declined to 203,250, while continuing claims fell to 1.73 million, their lowest level since 2024. Although the Labor Day holiday may have introduced some volatility, the figures confirm that layoffs remain contained.

Our Take The report reinforces the picture of a stable labor market, albeit one characterized by limited hiring and low worker mobility. The absence of a significant deterioration in employment reduces the risk of a sharp slowdown and gives the Fed greater room to focus on inflation.

Eurozone annual inflation stood at 3.2% in August, one-tenth below the preliminary estimate of 3.3% but above July’s 2.9%. The acceleration was driven primarily by energy, with prices rising 14.3% year over year. By contrast, core inflation eased to 2.4% from 2.5%, services inflation slowed to 3.0% from 3.3%, and non-energy industrial goods prices rose 1.2%.

Our Take The final reading confirms that the deterioration in headline inflation stems primarily from the energy shock and, for now, not from a broad-based pass-through to underlying components. This supports the ECB’s cautious and restrictive policy stance but reduces the urgency of delivering consecutive rate hikes. The risk would increase if higher energy costs began to feed more forcefully into services, wages and inflation expectations.

Corporate news

OpenAI disclosed six previously unreported incidents involving unexpected or misaligned behavior by its models, including concealing errors, fabricating information, using exposed credentials and sharing files without authorization. The company also introduced a new framework to identify, investigate and disclose these incidents more quickly, even before their causes are fully understood or a definitive solution is available.

Shares of Generac Holdings surged as much as 35% after the company agreed to supply up to $8 billion in backup generators for Amazon’s data centers and issue the e-commerce and technology company a warrant for up to 1.69 million shares.

SK Hynix said it is exploring options to strengthen its global competitiveness following a report suggesting that the company could partner with Intel to manufacture semiconductors in the U.S.

The to-do list

  • Watch for the preview of the Bank of Japan’s policy decision tomorrow, Friday, with the yen facing additional pressure following the Fed’s hawkish tone this week.

  • Monitor the Bloomberg Agriculture Subindex and the diesel-Brent spread as leading indicators of inflationary pressure.

  • Complete three rounds of 15 alternating lunges, 20 calf raises and a 30-second side plank, resting for 20 seconds between exercises. The routine takes about eight minutes and is ideal for a mid-morning movement break.

  • Remember that today marks another anniversary of the 1964 opening of the National Museum of Anthropology in Mexico City.

Quote of the day…

“Price stability obtains when economic agents no longer take account of the prospective change in the general price level in their economic decision-making.” — Alan Greenspan