In a Friday report from INEGI, the official statistics agency,
Mexico's December consumer confidence index fell by a
seasonally-adjusted 0.3%. Combined with the revised decline
of 1.6% in November, consumer optimism in Mexico has now fallen for
two months in a row for the first time since autumn 2009.
According to the report, the pullback in optimism during December
stemmed mostly from big declines in consumers' future expectations
for their own families and in their view of the current situation
in the country as a whole. In contrast, consumers reported a
stronger view of their own family's current situation and a greater
willingness to buy durable goods. They also reported improved
expectations for the country as a whole.
Comment: The second straight
month of declining optimism during December probably reflects the
rebound in Mexican unemployment during the autumn. Moreover,
many press reports in late 2010 focused on expectations that the
Mexican economy would grow less quickly in 2011.
Nevertheless, economic activity in Mexico is still growing.
According to a separate report on Friday, for example, Mexico's
December purchasing managers index for manufacturing continued to
point to good growth in the country's factory sector.
Continuing growth in exports and manufacturing will probably limit
the rise in Mexican unemployment and allow the recent increase in
domestic consumption to accelerate. It is particularly
encouraging that the confidence report's subindex on willingness to
buy durable goods has now risen in nine of the last twelve
months. If unemployment does not rise too much, and if
consumer confidence does not drop excessively, increased domestic
demand will help make Mexico's current economic recovery more
Patrick Fearon, CFA
Vice President, Fund Management
Seasonally Adjusted, January 2003 = 100