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