MexECON Blog

February Retail Sales Fall 1.3 Percent

Mexican retail sales fell in February by a seasonally-adjusted 1.3%, after revised declines of 0.4% in January and 2.4% in December.  That marked the first time retail sales had declined for three months in a row since the 2008-2009 recession.  On an unadjusted, constant-price basis, sales in February were down 1.7% from the same month one year earlier.  The retail subsectors posting year-over-year sales declines in February were stores specializing in metal and glass products; home décor, domestic appliances, and computers; clothing, footwear, and textile goods; department stores; and recreational, paper, and personal products.  The only retail subsectors to post year-over-year increases in sales were healthcare and food and beverages.

At the wholesale level, February sales fell 1.2%, after a 0.5% decline in January.  Wholesale receipts in February were up 0.4% year-over-year.

Comment:  As I predicted after the retail report last month, a tepid job market and sales tax increases that took effect at the beginning of 2014 are continuing to weigh on Mexican consumption.  Because of the lack of meaningful improvement in labor demand since mid-2013, and because of a jump in joblessness during March, I suspect that the labor market issues will remain a headwind for the retail sector for the time being.  As consumers get used to the higher sales taxes, there could be some modest rebound in sales, but I see no near-term prospect for a significant, sustained uptrend.  That will likely keep Mexican economic growth from experiencing the big acceleration that some observers are expecting.

Patrick Fearon, CFA
Vice President, Fund Management

                                                  Mexican Retail Sales
                                        Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Retail Sales 1402

                                              Mexican Wholesale Sales
                                        Seasonally Adjusted, 2003 = 100
                                                    Source:  INEGI
Wholesale Sales 1402

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