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
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