MexECON Blog

February Consumer Confidence in Partial Rebound

Mexico's February consumer confidence index rose to a seasonally-adjusted 86.0, after revised readings of 83.5 in January and 89.1 in December.  The rise in February snapped a five-month losing streak, but it still left the index near its lowest level since mid-2010.  According to the report, the rise in February partly reflected a jump in the subindex on consumers' future expectations for their own family.  That subindex rose to 97.8 from 94.7 in January.  Meanwhile, the subindex on consumers' view of the current situation for their own family edged up to 92.3 from 91.6, and the subindex on their view of the current situation in the country as a whole jumped to 85.6 from 82.4.  In contrast, the February subindex on consumers' future expectations for the country fell modestly to 88.7.  The subindex on consumers' willingness to buy durable goods dropped for a third straight month, falling to 62.1.  That was the lowest reading for that subindex in almost four years.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  Most of the modest rebound in February probably represents a natural snap-back after new sales taxes caused a sharp drop in optimism during January.  Consumers are probably starting to get used to the higher prices they are seeing on a wide range of goods.  In addition, however, the upturn in optimism may reflect a slightly better job market.  Recent data suggest hiring may be starting to strengthen again in manufacturing, construction, and government.  If upcoming data confirm that hiring is indeed improving, and if it continues to improve, consumer confidence would probably keep rising.  That would likely boost consumer spending again, helping to offset the softness in some other sectors of the Mexican economy.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1402

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