MexECON Blog

Retail Sales Keep Rising in September

Mexico's September retail sales rose by a seasonally-adjusted 1.0% from the previous month, after a gain of 1.1% in August.  That marked the first back-to-back sales increases since the beginning of the year.  Without seasonal adjustments, but stripping out price changes, sales in September were up 3.8% from the same month one year earlier.  The retail subsectors posting the best year-over-year increases in September were clothing and footwear stores and department stores.  Other establishments posting sales increases included those associated with healthcare; motor vehicles, fuels, and lubricants; metal and glass products; and recreational, paper, and personal products.  Sales declined from a year earlier at stores providing food and beverages and those selling interior décor goods, domestic appliances, and computers.  The report was released today by INEGI, the official statistics agency.

Comment:  Retail demand in Mexico continues to rise at a good pace, consistent with the ongoing improvement in the labor market.  Unemployment fell only slowly through most of the current economic recovery, but joblessness has seemed to decline more rapidly in recent months.  Whether labor conditions are still improving will become clearer on Friday, when unemployment data for October will be released.  Even though the current situation for consumption spending is generally constructive, however, high food prices are having a negative impact.  That can be seen clearly in the year-over-year decline in the volume of goods sold at food and beverage stores.  And of course, the Mexican economy in general and retail demand in particular remain at risk if the European debt crisis worsens or U.S. politicians fail to head off a "fiscal cliff" of big tax hikes and spending cuts currently programmed for year's end.  Nevertheless, the most likely scenario in the near term is that Mexican consumer spending will continue to trend upward.

Patrick Fearon, CFA
Vice President, Fund Management

                                                 Mexican Retail Sales
                                          Seasonally Adjusted, 2003 = 100
                                                      Source:  INEGI
Retail Sales 1209

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