MexECON Blog

September Consumer Confidence Index Falls to 93.9

 

Mexico's September consumer confidence index fell to a seasonally-adjusted 93.9, after a revised 95.8 in August.  The index now stands at its lowest level since June.  According to the report, released Thursday by the official statistics agency INEGI, the decline in September stemmed from decreases in four of the five subindexes.  The subindex on consumers' view of the current situation for their own family dropped precipitously to a five-month low of 97.6, while the subindex on their view of the current situation for the country as a whole fell almost as sharply to a twelve-month low of 92.6.  The subindex on consumers' future expectations for the country declined to 98.4, reaching its lowest level since early 2012.  Reflecting a bit more stability, the subindex on consumers' willingness to buy durable goods fell just slightly to 81.4.  The subindex on consumers' future expectations for their own family rose slightly to 102.1.
Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  Although the index rose almost back to that level late last year, it has been trending downward ever since.  The decline in optimism reflects a range of economic challenges.  One problem is that U.S. demand for Mexican exports has been weak, holding down hiring in the manufacturing sector.  Meanwhile, government spending and construction activity have fallen in Mexico itself, further weighing on employment.  Finally, many consumers have suffered from a surge in food prices earlier in the year and an ongoing drop in remittances by family members working north of the border.  The weakness in consumer confidence is a reminder that the Mexican economy remains at risk of slipping into recession.
Patrick Fearon, CFA
Vice President, Fund Management

Mexico's September consumer confidence index fell to a seasonally-adjusted 93.9, after a revised 95.8 in August.  The index now stands at its lowest level since June.  According to the report, released Thursday by the official statistics agency INEGI, the decline in September stemmed from decreases in four of the five subindexes.  The subindex on consumers' view of the current situation for their own family dropped precipitously to a five-month low of 97.6, while the subindex on their view of the current situation for the country as a whole fell almost as sharply to a twelve-month low of 92.6.  The subindex on consumers' future expectations for the country declined to 98.4, reaching its lowest level since early 2012.  Reflecting a bit more stability, the subindex on consumers' willingness to buy durable goods fell just slightly to 81.4.  The subindex on consumers' future expectations for their own family rose slightly to 102.1.

Comment: Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  Although the index rose almost back to that level late last year, it has been trending downward ever since.  The decline in optimism reflects a range of economic challenges.  One problem is that U.S. demand for Mexican exports has been weak, holding down hiring in the manufacturing sector.  Meanwhile, government spending and construction activity have fallen in Mexico itself, further weighing on employment.  Finally, many consumers have suffered from a surge in food prices earlier in the year and an ongoing drop in remittances by family members working north of the border.  The weakness in consumer confidence is a reminder that the Mexican economy remains at risk of slipping into recession.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1309

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