Mexico's September consumer confidence index rose to a
seasonally-adjusted 90.4, after revised readings of 88.4 in August
and 88.6 in July. Prior to that, the index had stood at 90.8
in June. According to the report, the rebound in September
was very broad based, with all subindexes posting increases.
The subindex on consumers' view of the current situation for their
own family rose to 96.3, while the subindex on their future
expectations for their family rose to 98.4. The subindex on
consumers' assessment of the current situation for the country as a
whole jumped to a 13-month high of 95.5, while the subindex on
their future expectations for the country rose to 90.4. The
subindex on consumers' willingness to buy durable goods rose to a
ten-month high of 76.6.
The report was released last Friday by INEGI, the official
Comment: Mexico's consumer
confidence index is designed so that readings of 100 reflect the
level of optimism in 2003. The index fell sharply around the
turn of the year, mostly because of new sales taxes that took
effect in January. Optimism then rebounded through early
summer as consumers adjusted to the new taxes, but it showed
another worrisome retreat in mid-summer. The rebound in
September suggests confidence has now bottomed out again and may be
ready to renew its upward trend. That probably reflects
salutary developments such as the recent reacceleration in Mexican
exports and a recovery in the construction sector.
Nevertheless, the labor market remains relatively soft, and
inflation is relatively high, and that could limit the gains in
consumer optimism going forward.
Patrick Fearon, CFA
Vice President, Fund Management