MexECON Blog

Consumer Confidence Index Falls to 93.4

Mexico's June consumer confidence index fell to a seasonally-adjusted 93.4, down from revised readings of 95.3 in May and 95.9 in April.  According to the report, released Wednesday by the official statistics agency INEGI, the decline in June reflected decreases in all five subindexes.  The subindex on consumers' future expectations for the country as a whole dropped 2.9% to 99.2, while the subindex on their view of the country's current situation fell 2.2% to 94.4.  The subindex on consumers' future expectations for their own family fell 1.0% to 99.8, and the subindex on their view of their family's current situation decreased 1.4% to 94.2.  Finally, the subindex on consumers' willingness to purchase durable goods decreased 1.6% to a level of just 78.4.

Comment: Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  After a steep decline during the 2008-2009 recession, the index climbed almost back to that level by the end of last year.  Since then, however, optimism has been deteriorating again.  The U.S. economy is growing only slowly, keeping a lid on Mexican exports.  On top of that, concerns about tighter U.S. fiscal policy prompted a sharp drop in trade at the turn of the year, and a surge in the peso during the spring rendered Mexican goods and services less competitive.  Exports have softened considerably, industrial production has flattened out, and hiring has weakened.  To make matters even worse for the Mexican consumer, supply shocks have recently pushed food prices dramatically higher.  Employment prospects and optimism will eventually stabilize, but for now, Mexican consumer confidence could continue to fall and consumer spending will probably remain weak.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1306

Consumer Confidence Falls to 93.4
Mexico's June consumer confidence index fell to a seasonally-adjusted 93.4, down from revised readings of 95.3 in May and 95.9 in April.  According to the report, released Wednesday by the official statistics agency INEGI, the decline in June reflected decreases in all five subindexes.  The subindex on consumers' future expectations for the country as a whole dropped 2.9% to 99.2, while the subindex on their view of the country's current situation fell 2.2% to 94.4.  The subindex on consumers' view of the current situation for their own family decreased 1.4% to 94.2, and the subindex on their future expectations for their family fell 1.0% to 99.8.  Finally, the subindex on consumers' willingness to purchase durable goods decreased 1.6% to 78.4.
Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  After a steep decline during the 2008-2009 recession, the index climbed almost back to that level by the end of last year.  Since then, however, optimism has been deteriorating again.  The U.S. economy is growing only slowly, keeping a lid on the demand for Mexican exports.  Concerns about tighter U.S. fiscal policy also prompted a sharp drop in trade at the turn of the year, and a surge in the peso during the spring rendered Mexican goods and services less competitive.  Exports have softened considerably, industrial production has flattened out, and hiring has weakened.  To make matters even worse for the Mexican consumer, supply shocks have recently pushed food prices dramatically higher.  Employment prospects and optimism will eventually stabilize, but for now, Mexican consumer confidence could continue to fall and consumer spending will probably remain weak.
Patrick Fearon, CFA
Vice President, Fund Manag

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