MexECON Blog

February Retail Sales Rise 2.7 Percent YOY

In a report from INEGI, the official statistics agency, Mexico's February retail sales rose by a seasonally-adjusted 0.3%, erasing all the revised decline of 0.2% in January.  Without seasonal adjustments, but stripping out the impact of price increases, sales in February were up 2.7% from the same month one year earlier.  According to the report, the retail subsectors posting year-over-year gains in February were motor vehicles, fuels, and lubricants; textiles and clothing accessories; metal and glass products; paper products; healthcare; food and beverages; and department stores.

Comment:  Consumption spending was the top source of economic growth in Mexico in both the third and fourth quarters of 2010.  With retail sales continuing to climb, consumption appears to be making a good contribution to growth in early 2011 as well.  In all likelihood, Mexican retail sales are likely to keep trending higher in the coming months.  There is probably still a lot of pent-up demand left over from the 2008-2009 recession.  In addition, exports and industrial production are still growing well, unemployment is falling gradually, and consumer confidence has been improving.  One key risk to the retail sector would be if the peso continues to strengthen or some global crisis weighed on exports and industrial hiring.  Rising violence by drug cartels could also start to have more of an impact on consumers.  Finally, surging prices for fuel and food could eventually force consumers to cut back on discretionary purchases.  On balance, however, the near-term outlook for the retail sector remains positive.

Patrick Fearon, CFA
Vice President, Fund Management

                                      Mexican Retail Sales
                              Seasonally Adjusted, 2003 = 100
                                            Source:  INEGI
Retail Sales 1102

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