MexECON Blog

March Consumer Confidence Falls Slightly

Mexico's March consumer confidence index fell by a seasonally-adjusted 0.1%, matching the 0.1% decline in February.  However, the two declines have not been enough to offset the 2.6% surge in optimism during January.  According to the report, released Tuesday by the official statistics agency INEGI, the decline in March came in large part from a 1.3% decrease in the subindex on consumers' future expectations for their own family and a 1.2% fall in the subindex on their view of their family's current situation.  The subindex on consumers' future expectations for the country as a whole declined 0.6%.  In contrast, the March subindex on consumers' view of the current situation for the country jumped 3.4%, erasing its small decline in the previous month.  The volatile subindex on consumers' willingness to buy durable goods rose 6.7% in March, following a decline of 19.6% in February and a jump of 12.1% in January.

Comment:  Over the last year, Mexico's consumer confidence index has often spiked, only to fall back modestly for a couple of months before the next move higher.  Therefore, the two straight declines in February and March may not be much of a problem.  It still appears that gradually declining unemployment is boosting confidence, and the modest rebound in consumers' willingness to buy durable goods is evidence of that.  Nevertheless, rising food and energy costs present a major risk to the consumer sector in Mexico.  If prices rise too rapidly, optimism could fall and consumption could be ratcheted downward enough to significantly dent Mexico's economic growth.

Patrick Fearon, CFA
Vice President, Fund Management

                                            Mexican Consumer Confidence
                                    Seasonally Adjusted, January 2003 = 100
                                                      Source:  INEGI
Consumer Confidence 1203

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