MexECON Blog

April Retail Sales Rise 4.6 Percent YOY

Mexico's April retail sales jumped a seasonally-adjusted 1.1%, after a revised flat reading in March.  Without seasonal adjustments, but stripping out the impact of price increases, sales in April were up 4.6% from the same month one year earlier, marking the strongest year-over-year increase since last November.  According to the report, released today by the official statistics agency INEGI, seven of the nine retail subsectors showed year-over-year sales gains in April, including paper products; department stores; textiles and clothing accessories; healthcare; metal and glass products; motor vehicles, fuels, and lubricants; and domestic appliances.  The only retail subsector posting a year-over-year decline was food and beverages.

Comment:  Today's strong retail report has to be taken with a grain of salt, as it was heavily impacted by this year's late Easter.  In 2010, the Easter holiday came in March, while in 2011, the holiday came in April.  Spending in April was therefore much higher compared with both the previous month and the same month one year earlier.  Going forward, consumers could pull back again in the face of high prices for energy and food products, even though those prices have recently moderated a bit.  Just as important, the global economy has entered what could be a prolonged "soft spot" that could weigh on Mexico's exports, industrial production, and hiring.  In sum, consumption spending in Mexico still looks likely to keep growing in the near term, but there are headwinds that bear watching.

Patrick Fearon, CFA
Vice President, Fund Management

                                       Mexican Retail Sales
                              Seasonally Adjusted, 2003 = 100
                                           Source:  INEGI
Retail Sales 1104

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