MexECON Blog

July Retail Sales Unchanged

Today, the MexECON Blog initiates coverage of Mexican retail sales, a monthly series published by the national statistics agency INEGI.  According to today's report, Mexico's July retail sales were essentially unchanged from the previous month, after adjusting for seasonal variations.  That compares with a decline of 0.8% in June and a rise of 0.4% in May.  Compared with the same month one year earlier, July sales were up 2.0% after stripping out price increases, marking an acceleration from the year-over-year rise of 1.5% in June but still weaker than the 5.0% gain in the year to May.  The report indicated that the retail categories reflecting increased sales on a year-over-year basis were textiles and clothing stores; food, beverage, and tobacco stores; department stores; home décor stores; and computer outlets. 

Comment:  The faltering rebound in Mexican retail sales, and especially the lackluster performance of the last two months, helps to underline the fragile nature of Mexico's current economic boom.  Second-quarter economic growth was extremely strong (up 7.6% from one year earlier), but the recent growth has been unusually dependent on rising exports of trucks, autos, and auto parts to the United States.  Other demand categories, such as consumption and private investment, have been weak.  On Wednesday, INEGI will release revised figures for second-quarter growth, including a breakdown by demand category.  That should allow for a more precise understanding of where Mexico's economy really is.  In any case, however, it is clear that the country's current economic boom is not yet on a broad, firm foundation.  The Mexican economic rebound is at risk if U.S. inventory rebuilding continues to slow and U.S. corporate and consumer demand fail to accelerate.  In that case, Mexican exports could stall out before other sectors of the economy are growing fast enough to take up the slack.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexican Retail Sales
                                 Seasonally Adjusted, 2003 = 100
                                             Source:  INEGI
Retail Sales 1007

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