MexECON Blog

November Retail Sales Jump 2.2 Percent

Mexico's November retail sales jumped by a seasonally-adjusted 2.2%, for their strongest increase since August 2010.  Sales in October were revised upward to show a gain of 0.1%, instead of a slight decline in the original estimate.  Without seasonal adjustments, but stripping out the effect of price increases, November's sales were up 7.5% from the same month one year earlier.  The retail subsectors posting year-over-year sales gains in November included department stores; metal and glass products; textiles, clothing, and footwear; paper and personal products; healthcare; motor vehicles, fuels, and lubricants; domestic appliances, computers, and interior decorating goods; and food and beverages.  The report was released by INEGI, the official statistics agency.

Comment:  Mexican consumer spending continues to show surprisingly strong momentum.  Retail sales have now increased for six straight months, and they have risen in nine of the last twelve months.  Not only was November's monthly sales gain the best since August 2010, but the annual gain was the strongest since at least 2008.  The jump in retail activity during November came in spite of a rise in unemployment and a decline in consumer confidence in that month.  Therefore, the sales gain may partly reflect pent up demand after consumers slowed their spending last summer, in the midst of rising financial volatility and global recession fears.  Nevertheless, the upward trend in Mexico's consumer demand appears to be for real.  The momentum is especially important because it is helping make up for moderating export growth and a recent decline in investment.  Economic growth in Mexico is still at risk if U.S. demand falters, but for now, the solid, well balanced recovery looks like it will continue for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

                                               Mexican Retail Sales
                                    Seasonally Adjusted, 2003 = 100
                                                    Source:  INEGI
Retail Sales 1111

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