MexECON Blog

November Retail Sales Rise 1.1 Percent

Mexican retail sales rebounded by a seasonally-adjusted 1.1% in November, erasing their 1.0% decline in October and maintaining their strong upward trend.  Without seasonal adjustments, but stripping out price changes, sales in November were up 3.5% from the same month one year earlier.  The retail subsectors posting the best year-over-year increases in November were those associated with interior décor, domestic appliances, and computers; recreational, paper, and personal products; motor vehicles, fuels, and lubricants; clothing and footwear; healthcare; department stores; and metal and glass products.  The only retail subsector to post a sales decline from the previous year was food and beverages.

The report also showed that sales at the wholesale level declined 1.5% in November, 1.2% in October, and 1.4% in September.  Wholesale receipts in November were down 3.9% from the same month one year earlier.

The report was released today by INEGI, the official statistics agency.

Comment:  The continued rise in Mexican retail sales is encouraging.  If the uptrend doesn't peter out, it will help offset the recent softness in Mexican exports, industrial production, and fixed investment.  The most striking thing in today's report, however, is the divergence between rising retail sales and falling wholesale demand.  It appears that cautious retailers have been ordering less from their suppliers even as their sales continue to climb rapidly.  If wholesalers have responded by cutting purchases from manufacturers, it could help explain why industrial activity has flattened out.  The positive aspect of lower purchases from wholesalers and greater sales to consumers is that retailers' inventory-to-sales ratio must be falling.  If consumer demand continues to grow, this should eventually lead to renewed orders for wholesalers and manufacturers, helping ensure that Mexican economic growth does not slow too much.

Patrick Fearon, CFA
Vice President, Fund Management

                                                 Mexican Retail Sales
                                          Seasonally Adjusted, 2003 = 100
                                                   Source:  INEGI
Retail Sales 1211

                                            Mexican Wholesale Sales
                                        Seasonally Adjusted, 2003 = 100
                                                    Source:  INEGI
Wholesale Sales 1211

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