MexECON Blog

May Consumer Confidence Rises

Mexico's May consumer confidence index rose a seasonally-adjusted 2.0%, accelerating from a revised gain of 1.2% in April.  Prior to that, the index had fallen a revised 0.6% in March, and it was flat in February.  On a non-adjusted basis, optimism in May was up 8.1% from the same month one year earlier.  The increase during the month of May reflected improvements in four of the index's five subindexes.  The most notable was an 8.7% jump in the subindex on consumers' willingness to buy new durable goods.  The rise in that subindex was the strongest since last June.  Also notable was a 1.3% increase in the subindex on consumers' view of the current economic situation in the country.

Comment:  Consumer optimism in Mexico is now in a clear upswing.  With its increases in recent months, the trend is increasingly well established, and it appears to be more sustainable with each passing month.  The rise in optimism is consistent with the recent improvement in Mexico's labor market.  The country's unemployment rate has been trending downward 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 help make Mexico's on-going economic recovery more resilient.  In fact, the big jump in consumers reporting that they are more open to buying new consumer durables may be a sign that consumer spending will soon rise more vigorously, providing another source of growth to supplement rising exports.

Patrick Fearon, CFA
Vice President, Fund Management

                                      Mexico's Consumer Confidence Index
                                     Seasonally Adjusted, January 2003=100
                                                        Source:  INEGI
Consumer Confidence 1005

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