MexECON Blog

July Consumer Confidence Falls

In a report today from INEGI, the national statistics agency, Mexico's July consumer confidence index fell 0.8% after seasonal adjustments.  However, the decline reversed only a small part of the accelerating increases over the previous three months, which included an upwardly revised rise of 3.8% in June.  On an unadjusted basis, optimism in July was up 2.3% from the same month one year earlier.  According to today's report, the decline in confidence during July stemmed from a sharp pullback in the subindex on consumers' views of the present situation in the Mexican economy and a more modest decline in the subindex on consumers' willingness to buy durable goods.  The subindex on consumers' views of the present situation of their own family was virtually unchanged.  The subindexes on expectations for the national economy and for the respondents' own families were modestly higher.

Comment:  After the rise in consumer optimism during the spring, the pullback in July does not seem too worrisome, especially given the continuing improvement in future expectations.  Other recent reports suggest Mexican unemployment is falling again after a rebound during the spring, and that should also encourage continued optimism and eventually spur stronger consumer spending.  As inventory rebuilding begins to slow in the United States, and as U.S. corporate and consumer demand remain tepid, Mexican exports and industrial activity look set to moderate.  If that happens, continued economic recovery in Mexico could hinge in part on an acceleration in consumer demand.

Patrick Fearon, CFA
Vice President, Fund Management

                                     Mexico's Consumer Confidence Index
                                   Seasonally Adjusted, January 2003 = 100
                                                         Source:  INEGI
Consumer Confidence 1007

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