MexECON Blog

May Retail Sales Fall 0.1 Percent

Mexican retail sales fell in May by a seasonally-adjusted 0.1%, after revised increases of 1.2% in April and 1.3% in March.  Prior to that, sales had declined for three straight months from December through February.  On an unadjusted, constant-price basis, sales in May were up 1.6% from the same month one year earlier.  According to the report, the retail subsectors posting year-over-year sales increases in May were recreational, paper, and personal products; food and beverages; department stores; and metal and glass products.  The retail subsectors posting year-over-year declines were clothing, footwear, and textile goods; home décor, domestic appliances, and computers; motor vehicles, fuels, and lubricants; and healthcare.

At the wholesale level, May sales fell 1.3%, essentially erasing their 1.3% gain in April.  Nevertheless, sales at the wholesale level were up 0.5% year-over-year.

Comment:  In spite of the small pullback in retail demand during May, it is clear that Mexican consumers are adjusting to the increased sales taxes that took effect at the beginning of the year.  The general trend in retail sales seems to be modestly upward again.  Nevertheless, I suspect that tepid hiring and relatively high unemployment will continue to limit any improvement.  While it is true that Mexican exports have been strengthening recently, and while there are some signs that the weak construction sector is at least stabilizing, I believe that continued lethargy in consumer spending will probably remain a drag on overall economic growth in the near term.

Patrick Fearon, CFA
Vice President, Fund Management

                                                    Mexican Retail Sales
                                            Seasonally Adjusted, 2003 = 100
                                                        Source:  INEGI
Retail Sales 1405

                                                    Mexican Wholesale Sales
                                               Seasonally Adjusted, 2003 = 100
                                                            Source:  INEGI
Wholesale Sales 1405

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