MexECON Blog

Consumer Confidence Falls in March

Mexico's March consumer confidence index fell by a seasonally-adjusted 0.4%, but that reversed only a small portion of the revised increases of 1.6% in February and 1.2% in January.  According to the report, from the official statistics agency INEGI, the decline in optimism during March came from deteriorating views of the current economic situation in the country as a whole, declining willingness to buy durable goods, and consumers' weaker expectations for their own family.  There was modest improvement in consumers' views of the current economic situation of their own family and in their future expectations for the country as a whole.

Comment:  The decline in optimism during March probably reflects the small uptick in unemployment the previous month, as well as rising food and energy costs.  Nevertheless, the decline is not too alarming in the context of the strong increases in optimism during the first two months of the year and the good performance that the Mexican economy has been demonstrating recently.  While it is true that the benefits from Mexico's current strong export growth and rising industrial production are likely to accrue primarily to only a small sliver of the population, that sliver probably accounts for the bulk of the country's consumer demand.  Moreover, enough benefit is likely to trickle down to the rest of the population to keep optimism on the upswing and support generalized increases in consumer spending.  In a word, the recovery in Mexican consumption demand is likely to continue in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

                           Mexican Consumer Confidence
                   Seasonally Adjusted, January 2003 = 100
                                          Source:  INEGI
Consumer Confidence 1103

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