MexECON Blog

Consumer Confidence Rebounds to 97.7

Mexico's April consumer confidence index rose to a seasonally-adjusted 97.7, after a revised 96.3 in March.  The reading for April was the highest since January, and it was only modestly below the cycle high of 98.5 in December.  According to the report, released today by the official statistics agency INEGI, the rebound in April reflected increases in four of the five subindexes.  The subindex on consumers' future expectations for the country as a whole jumped 4.0% to 105.5, after readings of 101.4 in March 104.1 in February.  The subindex on their willingness to buy durable goods jumped 2.7% to 80.3, and the subindex on their view of the current situation for their own family rose 1.5% to 97.1.  The subindex on consumers' assessment of the current situation for the country edged up to 96.7, but the subindex on their future expectations for their own family dropped to 103.3.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism prevailing in 2003.  The index had rebounded almost back to that level at the end of 2012, before falling again in the midst of an economic soft spot at the turn of the year.  The partial rebound in April is consistent with other recent reports showing that several sectors of the Mexican economy are now strengthening again.  Nevertheless, it is important to keep in mind that growth is still tepid in much of the developed world, there is still a substantial risk of contagion if the European debt crisis worsens again, and the surging peso could soon start to weigh on Mexican exports.  Moreover, some sectors of the Mexican economy remain weak.  This could limit the rebound in confidence going forward.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1304

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