MexECON Blog

September Retail Sales Rise 4.1 Percent YOY

Mexican retail sales fell a seasonally-adjusted 0.1% in September, but the decline erased only a small part of the revised increases of 0.8% in August and 0.7% in July.  Without seasonal adjustments, but stripping out the impact of price increases, sales in September were up 4.1% from the same month one year earlier, close to the 4.4% gain in the year to August.  According to the report, from the official statistics agency INEGI, the increase over last year stemmed from higher sales in a range of categories.  The categories posting gains included food and beverages, home appliances, clothing and accessories, metal and glass products, autos and auto fuels, and others.  The only category reported to have had declining sales over the last year was healthcare.

Comment:  Consumer spending in Mexico is clearly on the rise, which should help broaden the current economic recovery in Mexico.  If there is no sudden stop in exports (the main driver of the recovery at present), industrial activity should keep growing and hiring should continue to rise, prompting even stronger retail sales gains.  Other than a precipitous slowing in exports, the main risk to consumer spending is probably the fact that, in spite of recent hiring gains, unemployment has been falling only slowly.  Moreover, consumer spending is probably still being held back by a continuing credit crunch and rising violence by drug cartels.

Patrick Fearon, CFA
Vice President, Fund Management

                                       Mexican Retail Sales
                            Seasonally Adjusted, 2003 = 100
                                           Source:  INEGI
Retail Sales 1009

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