MexECON Blog

May Retail Sales Fall 0.2 Percent

Mexican retail sales edged down by a seasonally-adjusted 0.2% in May, erasing part of their 0.9% gain in April.  Without seasonal adjustments, but stripping out the impact of price changes, sales in May were up 5.2% from the same month one year earlier.  The retail subsectors posting the best year-over-year increases in May were domestic appliances and computers; autos, auto parts, and lubricants; department stores; metal and glass products; and healthcare.  The only major subsector to post declining sales was food and beverages.  The report was released today by INEGI, the official statistics agency.

Comment:  Discussing the strong April sales report last month, I warned that the worsening of the European debt crisis and softer economic growth in the United States could soon start to weigh on Mexican retail sales.  The fall in sales during May may be a sign that the problems abroad are indeed starting to have an impact.  Other recent reports from Mexico have pointed to slower export growth, falling industrial production, a stuck unemployment rate, and flat consumer optimism.  Therefore, there is a good chance that sales will continue to soften.  There is still some upward momentum in Mexico's retail sector, but a slowdown could well be in the works.

Patrick Fearon, CFA
Vice President, Fund Management

                                          Mexican Retail Sales
                                   Seasonally Adjusted, 2003 = 100
                                             Source:  INEGI
Retail Sales 1205

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