MexECON Blog

March Retail Sales Rise 1.0 Percent YOY

Mexico's March retail sales fell by a seasonally-adjusted 0.3%, erasing the 0.3% gain in February and marking the third decline in the last five months.  Without seasonal adjustments, but stripping out the impact of price increases, sales in March were up just 1.0% from the same month one year earlier, for the slowest rate of increase since March 2010.  According to the report, from the official statistics agency INEGI, only five of the nine retail subsectors posted year-over-year gains in March.  The subsectors posting gains included paper products; metal and glass products; textiles and clothing accessories; motor vehicles, fuels, and lubricants; and department stores.

Comment:  The drop in Mexican retail sales during March bears watching, as it may show that rising fuel and food costs are starting to weigh on consumption spending.  In the last two quarters of 2010, consumption was a bigger source of growth than net trade, so any sustained slowdown could have a significant impact on Mexico's overall economic performance.  Nevertheless, there are reasons to be optimistic about the retail sector going forward.  There is still probably a lot of pent-up demand left over from the 2008-2009 recession.  In addition, exports and industrial production are still on an upward trend, unemployment is falling gradually, and consumer confidence has generally been improving.

Patrick Fearon, CFA
Vice President, Fund Management

Mexican Retail Sales
Seasonally Adjusted, 2003 = 100
Source:  INEGI
Retail Sales 1103

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