MexECON Blog

May Consumer Confidence Edges Higher

Mexico's May consumer confidence index rose 0.2%, after revised increases of 2.4% in April and 0.8% in March.  According to the report, released Monday by the official statistics agency INEGI, the small increase in May reflected gains in three of the five subindexes.  The subindex on consumers' future expectations for the country as a whole rose 0.7%, marking its third straight monthly increase.  The subindex on consumers' future expectations for their own family rose 0.5%, while the subindex on consumers' willingness to buy durable goods edged up 0.1%.  In contrast, there were significant pullbacks in the subindexes on consumers' views of the current situation of their own family and of the country as a whole.

Comment:  The minimal gain in optimism last month is consistent with the sharp slowdown in Mexico's May purchasing managers index for the factory sector.  That index, released yesterday, showed a big slowdown in new orders and production.  Moreover, recent data from abroad has pointed to weaker demand around the globe.  Mexico's consumer sector still has some momentum, and optimism could get a boost after the July presidential election.  Nevertheless, continued bad news regarding issues such as the European debt crisis and the weakening U.S. labor market could push Mexican consumer confidence downward in the near future.  Mexican economic growth has been coming in large part from consumer demand in recent quarters, so if the Mexican consumer pulls back, it could have important ramifications for the country's economy.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexican Consumer Confidence
                                 Seasonally-Adjusted, January 2003 = 100
                                                       Source:  INEGI
Consumer Confidence 1205

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