MexECON Blog

November Consumer Confidence Falls

In a report from INEGI, the official statistics agency, Mexico's November consumer confidence index fell a seasonally-adjusted 1.4%, after revised increases of 2.1% in October and 2.6% in September.  According to the report, the decline in November stemmed from a big fall in consumers' expectations for the national economy and a more moderate decline in their willingness to buy durable goods.  In contrast, consumers reported greater optimism about the current situation of their own family, the current situation of the national economy, and their future expectations for their own family.

Comment:  The decline in optimism in November probably reflects the rebound in Mexican unemployment during the autumn.  As export prospects moderate and the economy shows signs of slowing, hiring by Mexican firms has become weaker.  A report last week showed joblessness in Mexico rose from 5.2% in August to 5.5% in October.  Consumer confidence in Mexico is still much stronger than one year ago, and that is likely to keep consumption spending on a modest upward path.  However, if unemployment does not start falling again and if consumers fail to ramp up their spending more dramatically, domestic demand may not be able to offset the expected softening of Mexican exports.  If investment also fails to rebound, the Mexican economy could slow more than is currently anticipated.

Patrick Fearon, CFA
Vice President, Fund Management

                             Mexican Consumer Confidence
                      Seasonally Adjusted, January 2003 = 100
                                             Source:  INEGI
Consumer Confidence 1011

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