MexECON Blog

January Retail Sales Rise 3.0 Percent YOY

Mexico's January retail sales fell by a seasonally-adjusted 0.1%, but the increase in December was revised upward to a robust 1.1%, and sales in several months before that were also revised higher.  Without seasonal adjustments, but stripping out the impact of price increases, sales in January were up 3.0% from the same month one year earlier.  In December, retail sales had been up 2.6% year-over-year, and in November, sales were up just 2.4% year-over-year.  According to the report, from the official statistics agency INEGI, the retail subsectors posting year-over-year gains in January were metal and glass products; textiles and clothing accessories; motor vehicles, fuels, and lubricants; domestic appliances; food and beverages; department stores; and healthcare.

Comment:  Despite the small pullback in January, retail sales in Mexico are now on a clear uptrend.  Indeed, yesterday's report on fourth-quarter gross domestic product (GDP) showed that consumption spending has now been the top source of Mexican economic growth for the last two quarters.  Looking forward, it appears retail sales and consumption spending can continue to grow well.  There is probably still a lot of pent-up demand left over from the 2008-2009 recession.  In addition, exports and industrial production appear to be reaccelerating, unemployment is falling again, and consumer confidence has been improving.  The main risks to the retail sector would be if the peso continues strengthening or some global crisis weighed on exports, or if rising violence by drug cartels started to have more of an impact on consumers.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexican Retail Sales
                             Seasonally Adjusted, 2003 = 100
                                            Source:  INEGI
Retail Sales 1101 B




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