MexECON Blog

Consumer Confidence Jumps

Mexico's December consumer confidence index rose by a seasonally-adjusted 2.4%, after revised gains of 0.3% in November and 3.1% in October.  That marked the first three-month string of increases since last spring.  According to the report, released Tuesday by the official statistics agency INEGI, the rise in December came as the subindex on consumers' view of the current situation in the country as a whole jumped 6.0%.  That subindex fell 1.0% in November, but it staged a similarly large surge of 8.0% in October.  The subindex on consumers' future expectations for the country rose a strong 2.7% in December.  Consistent with these moves, the subindex on consumers' future expectations for their own family rose 3.0%, while the subindex on their view of the current situation for their family rose 2.2%.  The important subindex on consumers' willingness to buy durable goods edged down 0.4% in December, but that followed two months of good gains.

Comment:  Several recent reports out of Mexico have been contradictory.  For example, the country's purchasing managers' index for manufacturing has been at a record high for the last two months, suggesting broad growth in the factory sector, but other reports show Mexican exports softening since last summer and industrial activity falling back.  Now, the consumer confidence report shows an encouraging rise in optimism, but that seems to contradict other reports showing higher unemployment in October and November.  Against this contradictory background, it appears the improvement in optimism may in large part reflect Mexico's cooling inflation rate.  Slower price increases may continue to bolster consumer optimism and spending in the coming months.  However, the data on trade, industrial production, and unemployment suggest overall economic growth could be ready to slow significantly in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

                                              Mexican Consumer Confidence
                                              Seasonally Adjusted, 2003 = 100
                                                          Source:  INEGI
Consumer Confidence 1212

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