In a report yesterday, Mexico's August consumer confidence index
fell by a seasonally-adjusted 0.8%. The decline essentially
erased the revised 0.8% rebound in July. Moreover, readings
for several of the months before that were revised downward.
According to the report, from the official statistics agency INEGI,
the subindex on consumers' willingness to buy durable goods fell
5.5% in August, after rising 1.3% in July. The subindex on
consumers' views of the current situation for their own family
dropped 0.6%, after increasing 2.1% in the previous month.
All three of the remaining subindexes rose in August, but at a
weaker pace than in July.
Comment: Mexican consumer
confidence temporarily rebounded after the July 1 presidential
election, but it now looks like optimism is weakening again in
response to negative developments abroad. In fact, with the
downward revisions to so many prior months, it is now clear that
confidence has rolled over completely. With the Mexican
economy still growing unusually fast, there is some reason for
optimism, and consumer confidence had been on the upswing until
quite recently. However, consumers now face the implications
of the European debt crisis, slowing growth in the major developed
and emerging economies, and drought-inspired food price
inflation. If the weakening in confidence gets bad enough, it
could undermine domestic demand right when the problems abroad are
raising the risk of an export slowdown as well.
Patrick Fearon, CFA
Vice President, Fund Management
Mexican Consumer Confidence
Adjusted, January 2003 = 100