MexECON Blog

April Retail Sales Rise 1.1 Percent

Mexican retail sales rose in April by a seasonally-adjusted 1.1%, after an upwardly revised increase of 1.2% in March.  Prior to that, sales had fallen for three straight months.  On an unadjusted, constant-price basis, sales in April were still down 0.4% from the same month one year earlier, though that may partly reflect an exceptionally strong rise in April 2013.  According to the report, the retail subsectors posting year-over-year sales declines in April were motor vehicles, fuels, and lubricants; clothing, footwear, and textile goods; metal and glass products; and food and beverages.  The retail subsectors posting year-over-year sales increases were home décor, domestic appliances, and computers; department stores; recreational, paper, and personal products; and healthcare. 

At the wholesale level, April sales rose 1.3%, after a 0.4% increase in March.  Wholesale receipts were down 2.4% year-over-year.

Comment:  The shifting date of Easter can wreak havoc on the seasonal adjustment process, so the reported sales gains in March and April should be taken with a grain of salt.  Besides, even if they are accurate, the gains are not enough to offset the sales declines from December through February.  A big problem at the beginning of 2014 was the imposition of new sales taxes, though that impact is apparently now dissipating.  A broader problem has been tepid hiring, which has kept unemployment relatively high.  The stagnant labor market is probably a key reason why Mexican retail sales have basically been flat since mid-2012.  With consumers now adjusting to the recent tax hikes, optimism is recovering a bit.  Nevertheless, a large and sustained improvement in confidence and consumer demand would likely require a much stronger labor market, which in turn would probably depend on much stronger exports, investment, and industrial activity.  There is little sign of that happening yet.  Mexican economic growth is therefore likely to remain uninspiring in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

                                                   Mexican Retail Sales
                                           Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Retail Sales 1404

                                              Mexican Wholesale Sales
                                         Seasonally Adjusted, 2003 = 100
                                                        Source:  INEGI
Wholesale Sales 1404

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