MexECON Blog

March Consumer Confidence Retreats

Mexico's March consumer confidence index fell a seasonally adjusted 0.8%, according to a new report from the national statistics agency INEGI.  The decline in March followed a 0.1% dip in February.  However, these pullbacks still have not erased the index's 3.2% jump in January.  On a non-adjusted basis, the index in March was up 3.0% from the same month one year earlier.  The decline in optimism during March stemmed primarily from worsening views of the current economic situation in Mexico, but that followed two straight months of big improvements in that subindex.  The decline in March also reflected the survey respondents' more pessimistic expectations for their own economic situation in the coming year.  The respondents' view of their personal prospects has now declined for two straight months.

Comment:  Despite the decline in the March confidence index, consumer optimism appears to have stabilized in Mexico, and may even be on a modest upward path (see chart below).  That would be consistent with the recent improvement in Mexico's labor market.  The country's unemployment rate has been falling since mid-2009, and if exports and industrial activity continue to rebound, the labor market is likely to keep improving.  A stronger labor market and improved consumer optimism are important because they should make Mexico's current economic recovery more resilient.

Patrick Fearon, CFA
Vice President, Fund Management

                              Mexico's Consumer Confidence Index
                                     Seasonally Adjusted, 2003=100
                                                   Source:  INEGI
Consumer Confidence 1003

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