MexECON Blog

May Retail Sales Fall 2.1 Percent YOY

Mexico's May retail sales dropped by a seasonally-adjusted 2.1%, reversing the revised gain of 1.6% in April and marking their worst monthly decline since early 2010.  Without seasonal adjustments, but stripping out the impact of price increases, sales in May were up just 1.0% from the same month one year earlier.  According to the report, from the official statistics agency INEGI, only five of the nine retail subsectors posted year-over-year gains in May.  The subsectors posting increases included paper products; metal and glass products; textiles and clothing accessories; motor vehicles, fuels, and lubricants; and healthcare.

Comment:  Mexican retail sales have been choppy for the last few quarters, with declines every other month since last summer.  The steep drop in May almost certainly reflects the rebound in Mexican unemployment during the spring, as exports and industrial activity slowed in response to the global economic recovery hitting a soft spot.  In addition, rising fuel and food costs probably scared consumers and forced many to pull back on purchases.  Fortunately, other recent data has been relatively positive.  For example, fixed investment rebounded in April, and industrial production rebounded in May.  That suggests joblessness could soon top out and allow the Mexican consumer to resume buying more aggressively and consistently again. 

Patrick Fearon, CFA
Vice President, Fund Management

                                       Mexican Retail Sales
                           Seasonally Adjusted, 2003 = 100
                                           Source:  INEGI
Retail Sales 1105

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