MexECON Blog

Consumer Confidence Rebounds in October

In a report Friday, Mexico's October consumer confidence index rose by a seasonally-adjusted 1.8%.  It was the first increase in the index after declines of 1.5% in September and 1.2% in August.  The rebound in October stemmed mostly from a strong increase in the subindex on consumers' view of the current situation in the country as a whole.  That subindex jumped 2.8%, after a plunge of 5.1% in September.  In addition, the subindex on consumers' view of the current situation in their own family rose 0.2%, after a decline of 0.4% in the previous month.  The subindexes on consumers' future expectations for their own family and for the country as a whole fell modestly.  According to the report, from the official statistics agency INEGI, the subindex on consumers' willingness to buy durable goods fell sharply in October.

Comment:  The October rebound in Mexican consumer optimism is added evidence that the fallout from weakening U.S. economic growth may not be as bad as earlier feared.  Other positive news recently has included a drop in Mexican unemployment and slightly better employment and retail demand in the United States.  Nevertheless, there is no escaping the fact that economic growth is very weak in the United States and many key developed countries.  With European leaders still struggling to develop and implement a coordinated plan to address the Euro zone's debt crisis, global economic risks remain to the downside.  In this environment, Mexican exports are likely to continue slowing, and even though the country's domestic demand has some momentum that will help limit the damage from foreign weakness, Mexican economic growth is still likely to keep moderating for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

            Mexican Consumer Confidence
   Seasonally Adjusted, January 2003 = 100
                          Source:  INEGI
Consumer Confidence 1110

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