MexECON Blog

Retail Sales Rebound

Mexican retail sales rose in August by a seasonally-adjusted 1.1%, partially reversing their revised 1.3% fall in July.  Without seasonal adjustments, but stripping out price changes, sales in August were up a healthy 4.8% from the same month one year earlier.  The retail subsectors posting the best year-over-year increases in August were clothing and footwear; paper and personal products; motor vehicles, fuels, and lubricants; domestic appliances and computers; and department stores.  The report was released today by INEGI, the official statistics agency.

Comment:  As I noted after the retail sales report last month, the big drop in sales during July was likely just a bit of give-back after the strong 1.8% surge in June.  With Mexican unemployment continuing to fall, there is still considerable support for increased consumption spending.  The main threat to the retail sector is that accelerating inflation could eventually sap spending power.  Rapid price increases already appear to be weighing heavily on consumer optimism.   And of course, a severe worsening in the European debt crisis and slower economic growth abroad could impede Mexican economic growth.  Nevertheless, the most likely scenario in the near term is that Mexican consumer spending and economic growth in general will continue to trend upward at a good pace.

Patrick Fearon, CFA
Vice President, Fund Management

                                                 Mexican Retail Sales
                                          Seasonally Adjusted, 2003 = 100
                                                   Source:  INEGI
Retail Sales 1208

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