MexECON Blog

September Consumer Confidence Rises

According to a new report from INEGI, the official statistics agency, Mexico's September consumer confidence index rose a seasonally-adjusted 2.6%.  That marked a significant improvement from the revised increase of 0.2% in August and a revised decline of 0.2% in July.  The index has now risen in nine of the last eleven months.  According to the report, the rise in optimism during September was broad-based.  The subindex on consumers' view of their own current economic situation rose for a fourth straight month, jumping 3.5%, while the subindex on their view of the current situation in the national economy rose 3.0%.  The subindexes on consumers' future expectations for their own family and for the national economy also posted healthy increases.  The only subindex to fall back was the one tracking consumers' willingness to buy durable goods.  That subindex declined for only the second time in the last nine months, retreating 0.9%.

Comment:  The improvement in Mexican consumer confidence reflects continued declines in unemployment and increased remittances from family members working in the United States.  In the minds of Mexican consumers, those factors have apparently trumped concerns about rising drug violence.  Consumers are feeling better because the labor market is strengthening and income is rising, so even if Mexico seems a more dangerous place than it was before, more consumers are willing to buy.  That is important because the Mexican economic rebound is still too dependent on rising exports to the United States - particularly exports of trucks, autos, and auto parts.  If consumer optimism continues to improve and consumption spending continues to accelerate, it would indicate that Mexico's current growth spurt is not ready to end quite yet.  For the moment, however, the country's economic rebound is still too narrowly focused and has to be considered vulnerable to a slowdown, especially if the U.S. recovery continues to weaken.

Patrick Fearon, CFA
Vice President, Fund Management

                                Mexican Consumer Confidence
                        Seasonally Adjusted, January 2003 = 100
                                          Source:  INEGI
Consumer Confidence 1009

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