MexECON Blog

August Retail Sales Drop 0.3 Percent

Mexico's August retail sales dropped by a seasonally-adjusted 0.3%, following revised increases of 0.3% in July and 0.7% in June.  The fall in August was the first since a 1.3% decline in May.  Without seasonal adjustments, but stripping out the impact of price increases, sales in August were up a modest 2.7% from the same month one year earlier.  The retail subsectors posting year-over-year sales gains in August included metal and glass products; healthcare; motor vehicles, fuels, and lubricants; paper and personal products; and department stores.  The report was released by INEGI, the official statistics agency.

Comment:  The decline in Mexican retail sales during August is consistent with other reports showing a rebound in unemployment and falling consumer optimism that month.  Perhaps just as important, August was a time of extreme volatility and sharp declines in global financial markets, which almost certainly had a chilling impact on many consumers.  Despite the decline in August, retail activity in Mexico still appears to be on a modest uptrend, and the momentum in domestic demand will probably help cushion Mexico from the full impact of slowing growth in the key developed economies.  Nevertheless, risks are weighted to the downside, and Mexican economic growth could well slow or turn negative in the coming monhths.

Patrick Fearon, CFA
Vice President, Fund Management

                                               Mexican Retail Sales
                                     Seasonally Adjusted, 2003 = 100
                                                    Source:  INEGI
Retail Sales 1108

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