MexECON Blog

Consumer Confidence Rebounds

Mexico's October consumer confidence index jumped by a seasonally-adjusted 2.9%.  That was more than enough to erase the revised declines of 1.4% in September and 0.6% in August, and it marked the strongest increase since February 2011.  According to the report, from the official statistics agency INEGI, all five subindexes posted good gains in October.  The subindex on consumers' view of the current situation in the country as a whole surged 7.7%, after plunging 5.3% in September.  The subindex on consumers' future expectations for their own family rose 2.0%, and the subindex on their future expectations for the whole country rose 1.9%.    The subindex on consumers' view of the current situation for their own family increased 1.5%.  The key subindex on consumers' willingness to buy durable goods rose 4.4%, though that was not enough to offset the declines of 3.0% in September and 5.3% in August.

Comment:  Mexican consumer optimism has become fragile in the last several months, as the positive impact of strong economic growth and falling unemployment have been offset by the problem of accelerating inflation.  Recent data show inflation eased a bit in the first half of October, and if the trend continued later in the month, it could help explain the big rebound in confidence.  Nevertheless, inflation may need to keep moderating for optimism to stay on an uptrend.  If it does not, consumption demand in Mexico could weaken considerably going forward.

Patrick Fearon, CFA
Vice President, Fund Management

                                          Mexican Consumer Confidence
                                     Seasonally Adjusted, January 2003 = 100
                                                    Source:  INEGI
Consumer Confidence 1210

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