MexECON Blog

October Consumer Confidence Falls to 93.3

Mexico's October consumer confidence index fell to a seasonally-adjusted 93.3, after a revised 93.8 in September and 95.8 in August.  The index is now at its lowest level since the end of 2011.  According to the report, released Monday by the official statistics agency INEGI, the fall in October reflected declines in four of the five subindexes.  The most dramatic decline was in the subindex on consumers' willingness to purchase durable goods.  That subindex tumbled from a September reading of 80.7 to an October reading of just 76.6, its lowest level in more than a year.  The subindex on consumers' future expectations for their own family declined to 100.9, and the subindex on their view of the current situation for their own family fell to 96.6.  The October subindex on consumers' future expectations for the country as a whole edged downward to 97.4, but the subindex on consumers' view of the current situation for the country was steady at 92.6.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  The index rose almost back to that level late last year, but it has been trending downward ever since.  The decline in October probably stemmed in large part from the continued weakness in Mexican exports, which has held down hiring in the manufacturing sector.  Without a doubt, the partial shutdown of the U.S. government during October must have convinced many Mexican consumers that exports and hiring could soften further.  Weak government spending and falling construction activity have also weighed on Mexico's job market throughout 2013, and recent severe storms have caused extensive damage and widespread economic disruptions.  Coupled with a surge in food prices earlier in the year and ongoing weakness in remittances by family members working north of the border, there seems to be plenty of reason for the Mexican consumer to be losing optimism.  The Mexican economy therefore seems set to remain sluggish for the time being.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1310

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