MexECON Blog

Consumer Confidence Falls to 97.5

Mexico's February consumer confidence index fell to a seasonally-adjusted 97.5, down from revised readings of 98.0 in January and 98.7 in December.  According to the report, released Tuesday by the official statistics agency INEGI, the decline in February reflected decreases in four of the five subindexes.  The biggest decline came in the subindex on consumers' views of the current situation for their own family, which fell 4.1% to a reading of 96.1.  The subindex on consumers' future expectations for their own family fell 2.0% to 102.7.  Meanwhile, the subindex on consumers' views of the current situation for the country as a whole declined 2.2%, reaching 100.4, while the subindex on their future expectations for the country fell 3.0% to 103.8.  The subindex on consumers' willingness to buy durable goods rose 1.8%, but that came after two straight months of declines and still left the subindex at a relatively low 81.8.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism prevailing in 2003.  The index has been rebounding over the last three years since its plunge during the global financial crisis, and it is almost back to the 100 level, but the declines over the last two months bear watching.  The declines have come against a backdrop of other signs of weakness in the Mexican economy, including an increase in unemployment over the last several months.  Mexico's unemployment rate in January jumped to 5.3%, reaching its highest level in more than a year.  Among other negative indicators, retail sales dropped sharply in December, while exports and manufacturing weakened in January and February.  If those problems persist, and if consumer optimism falters, consumer spending could soften for a prolonged period and deprive the economy of a key source of growth.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1302

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