MexECON Blog

October Consumer Confidence Rises

In a Friday report from INEGI, the national statistics agency, Mexico's October consumer confidence index rose 1.8% after seasonal adjustments.  That marked the third straight month of improvement, after unrevised increases of 2.6% in September and 0.2% in August.  According to the report, the rise in optimism during October stemmed in part from a 1.1% increase in the subindex on consumers' future expectations for the national economy.  The improvement also reflected a 0.5% rise in the subindex on consumers' future expectations for their own family, a 0.3% rise in the subindex on consumers' willingness to buy durable goods, and a 0.2% rise in the subindex on consumers' view of the current situation in the national economy.  The only subindex that declined was the one on consumers' view of the current situation of their own family.  That subindex posted a decline of 3.1%, but the decline came after four straight months of increases.

Comment:  The continuing improvement in Mexican consumer confidence appears to reflect a healing labor market, rising incomes, and stable-to-rebounding remittances from family members working in the United States.  These factors are largely offsetting the negative impact of rising drug violence.  The rise in optimism is important because it points to strengthening consumer spending.  If consumer spending accelerates significantly, it could help broaden the country's economic recovery beyond the current boom in exports.  To become truly broad-based and resilient, however, Mexico's current recovery will also require sustained increases in investment.

Patrick Fearon, CFA
Vice President, Fund Management

              Mexican Consumer Confidence
    Seasonally Adjusted, January 2003 = 100
                           Source:  INEGI
Consumer Confidence 1010

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