MexECON Blog

January Retail Sales Rebound Partially

Mexican retail sales rose by a seasonally-adjusted 2.1% in January, for their best increase in more than two years.  However, the expansion reversed only about half the revised 3.6% plunge in December.  Without seasonal adjustments, but stripping out price changes, sales in January were up a modest 1.8% from the same month one year earlier.  The retail subsectors posting the best year-over-year increases in January were those associated with motor vehicles, fuels, and lubricants; recreational, paper, and personal products; clothing, footwear, and textile goods; department stores; and food and beverages.  Sales fell from the previous year at stores associated with furniture, domestic appliances, and computers; healthcare; and metal and glass products.

At the wholesale level, sales edged up 0.4% in January, after four straight months of decreases in excess of 1.0%.  January wholesale receipts were down 3.0% from the same month one year earlier.

Comment:  The partial rebound in retail and wholesale activity during January is encouraging, as it fits with other recent evidence that the weakness in Mexico's economy at the end of 2012 and the beginning of 2013 came in large part from temporary factors.  Caution ahead of the December inauguration of Mexico's new president and fear of the U.S. "fiscal cliff" beginning in January were clearly big challenges.  Now that the new administration is in place and the U.S. fiscal tightening has proved more modest than feared, there is reason to hope for a continued rebound not only in retail and wholesale activity but also in areas such as construction, mining, and exports.  Nevertheless, problems such as the long slide in construction activity throughout the second half of 2012 and the rise in unemployment in the fourth quarter of the year cannot be so easily dismissed.  They suggest Mexico may be facing hurdles completely separate from the change in administration and the tighter fiscal policy north of the border.  It will take a few more months of positive data before the "all clear" signal can be sounded for Mexico.

Patrick Fearon, CFA
Vice President, Fund Management

                                                 Mexican Retail Sales
                                         Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Retail Sales 1301

                                             Mexican Wholesale Sales
                                          Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Wholesale Sales 1301

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