Mexico's January consumer confidence index fell to a
seasonally-adjusted 98.3, compared with 99.1 in December.
However, that was the first decline since last September, and
recent readings are still the strongest since April 2008.
According to the report, released Wednesday by the official
statistics agency INEGI, the decline in January stemmed entirely
from a second straight drop in the subindex on consumers'
willingness to buy durable goods. That subindex fell 2.7% to
80.0. The subindex on consumers' view of the current
situation in the country as a whole rose slightly to 107.5, while
the subindex on their future expectations for the country as a
whole was unchanged at 103.1. The subindex on consumers' view
of the current situation for their own family rose
moderately to 105.1. The subindex on their future
expectations for their family jumped to 100.2.
Comment: Mexico's consumer
confidence index is designed so that readings of 100 reflect the
level of optimism prevailing in 2003. At current levels, the
index suggests Mexican confidence has now rebounded almost back to
that level after plummeting during the global financial crisis and
recession in 2008 and 2009. The index has a long way to go
before it would be back at its pre-crisis peak of 111.4 in October
2006, but if unemployment resumes its gradual retreat and inflation
continues to cool, optimism should keep rising. Rising
optimism would help keep consumption demand on the upswing,
providing good impetus for economic growth. The main risks
are that Mexico's construction and mining sectors have recently hit
a soft spot, while exports and manufacturing could take a hit if
U.S. fiscal policy tightens too suddenly or the European debt
crisis flares up again.
Patrick Fearon, CFA
Vice President, Fund Management