MexECON Blog

January Consumer Confidence Jumps

Mexico's January consumer confidence index jumped by a seasonally-adjusted 2.6%, after revised declines of 0.5% in each of the previous two months.  The rise in January was the strongest since September 2010.  For a second straight month, the increase stemmed mostly from a strong increase in the subindex on consumers' willingness to buy durable goods.  That subindex surged 12.5%, almost matching the 13.0% rise in December.  In addition, there were increases of 2.5% or more for the subindexes on consumers' views of the current situation in the country as a whole, their future expectations for the country, and their future expectations for their own family.  The subindex on consumers' view of the current situation of their own family was up 1.7% for the month.  The report was released on Friday by INEGI, the official statistics agency.

Comment:  Mexican unemployment fell to 5.0% in December, and last week's purchasing managers' report on manufacturing shows joblessness probably fell again in January.  This would go a long way toward explaining the broad improvement in Mexican optimism last month.  Other factors are probably also helping buoy consumer attitudes.  Recent data show the U.S. economy is gaining strength, which bodes well for Mexican exports, industrial production, and employment.  The improvement in the U.S. economy probably also means Mexicans working north of the border are remitting more of their earnings back to family members in Mexico.  At the same time, economic news out of Europe and Asia has improved, easing fears of a renewed global crisis.  If these trends continue, as I expect, Mexican consumer confidence and consumption demand will probably keep rebounding.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexican Consumer Confidence
                                Seasonally Adjusted, January 2003 = 100
                                                       Source:  INEGI
Consumer Confidence 1201

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