MexECON Blog

December Consumer Confidence Falls to 90.2

Mexico's December consumer confidence index fell to a seasonally-adjusted 90.2, after revised readings of 91.5 in November and 92.9 in October.  The index has now fallen for four straight months, leaving it at the lowest level since mid-2011.  According to the report, released Thursday by the official statistics agency INEGI, the decline in December stemmed mostly from consumers' growing pessimism about their own well being.  The subindex on consumers' view of the current situation for their own family dropped to 94.1, reaching its lowest level since the end of 2011, while the subindex on consumers' future expectations for their own family fell to 98.9, reaching its lowest level since August 2010.  The subindex on consumers' willingness to buy durable goods fell to a 15-month low of 75.8.  In contrast, the subindex on consumers' view of the current situation for the country as a whole rose to 89.8, and the subindex on their future expectations for the country increased to 93.1.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  The slide in the index over the last year is consistent with the slowdown in the economy that took place in 2013, but the recent declines probably also reflect worries about rebounding inflation and tax hikes that took effect on January 1.  That underscores the fact that tepid consumption is likely to be a continuing headwind for the Mexican economy in at least the early part of 2014, in spite of recent data pointing to stronger international trade and good growth in manufacturing.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1312

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