MexECON Blog

September Consumer Confidence Falls

In a report on Tuesday, Mexico's September consumer confidence index fell by a seasonally-adjusted 1.5%, after a revised 1.2% decline in August.  That marked the first back-to-back declines in the index since March and April.  The fall in September stemmed from declines in four of the five subindexes.  The biggest decrease came in the subindex on consumers' views of the current situation of the country as a whole.  That subindex dropped 5.5%, marking its biggest decline since October 2009.  The subindex on consumers' future expectations for their own family declined 0.5%, while the subindexes on consumers' views of the current situation of their own family and their future expectations for the country as a whole both fell by 0.4%.  According to the report, from the official statistics agency INEGI, the only subindex to post an increase in September was the one on consumers' willingness to buy durable goods.  That index jumped 5.8%, just reversing its 5.7% decline in August.

Comment:  The second straight decline in Mexican consumer optimism during September probably reflects rebounding unemployment, a sense that Mexico's economy is slowing, and continued shock over the recent volatility in world financial markets.  Mexican exports and industrial activity are still rising, and joblessness is still below its cycle peak.  There is also still some momentum in domestic demand, as indicated by the rebound in consumers' willingness to buy durable goods.  Nevertheless, the Mexican economy is vulnerable to considerable slowing if foreign economies continue to struggle, and risks to consumer demand are skewed to the downside.

Patrick Fearon, CFA
Vice President, Fund Management

                                        Mexican Consumer Confidence
                                Seasonally Adjusted, January 2003 = 100
                                                    Source:  INEGI
Consumer Confidence 1109

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