MexECON Blog

April Consumer Confidence Falls

Mexico's April consumer confidence index fell by a seasonally-adjusted 2.8%, and the March index was revised downward to show a decline of 0.8%.  That marked the first back-to-back decreases in optimism since early 2010, and the fall in April was the worst since August 2009.  According to the report, from the official statistics agency INEGI, all five subindexes registered substantial decreases in April, but the biggest declines were in the subindex on consumer willingness to buy durable goods, which fell 5.9%, and in the subindex on future expectations for the country as a whole, which fell 2.3%.

Comment:  The decline in Mexican optimism during March is at odds with recent data showing extraordinarily strong exports and a downward trend in unemployment.  Therefore, it appears that the fall in confidence most likely reflects other challenges, such as rising food and energy costs or concern about the earthquake in Japan.  There may also be growing concern about the strong peso, which could eventually weigh on exports, reduce the growth of industrial production, and slow hiring.  Nevertheless, back-to-back declines in this index do not necessarily imply a new downward trend.  Until there is more evidence pointing to a weakening in Mexico's consumer sector, it appears that the most likely scenario is for consumption demand to keep rising and giving a boost to the overall economy.

Patrick Fearon, CFA
Vice President, Fund Management

                          Mexican Consumer Confidence
                  Seasonally Adjusted, January 2003 = 100
                                        Source:  INEGI
Consumer Confidence 1104

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