MexECON Blog

Consumer Confidence Rises Slightly

Mexico's April consumer confidence index rose to a seasonally-adjusted 89.4, after revised readings of 89.3 in March and 86.8 in February.  However, that merely brought the index back to its level in December.  According to the report, the rise in April came entirely from increases in two of the five subindexes.  The subindex on consumers' view of the current situation for their own family rose to a five-month high of 95.7, and the subindex on their view of the current situation for the country as a whole rose to a four-month high of 87.7.  In contrast, the subindex on consumers' future expectations for their own family edged down to 98.6, and the subindex on their future expectations for the country fell to 89.2.  The April subindex on consumers' willingness to buy durable goods fell sharply to 74.7, though that came after the subindex posted a huge jump in March.

The report was released on Tuesday by INEGI, the official statistics agency.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  The modest rebound over the last couple of months suggests consumers are adjusting to the sales tax increases that took effect on January 1.  The rebound may also reflect a slight improvement in hiring over the last few months.  Optimism could therefore continue to improve a bit.  However, as I said in my discussion of last month's confidence report, the question is whether and when any rise in optimism would translate into a significant strengthening in consumer spending.  Stronger consumption demand remains one key for Mexico to return to faster economic growth.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1404

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