MexECON Blog

July Retail Sales Rise 0.4 Percent

Mexican retail sales rose in July by a seasonally-adjusted 0.4%, after an unrevised 0.2% gain in June and a flat performance in May.  On an unadjusted, constant-price basis, sales in July were up 2.0% from the same month one year earlier.  According to the report, the retail subsectors posting year-over-year sales increases in July were food, beverages, and tobacco; clothing, footwear, and textile goods; motor vehicles, fuels, and lubricants; home décor, domestic appliances, and computers; and department stores.  The retail subsectors posting year-over-year sales declines were recreational, paper, and personal products; healthcare; and metal and glass products.

At the wholesale level, sales jumped 4.9% in July, reversing their sharp 4.2% decline in June.  Sales at the wholesale level were up 0.4% year-over-year.

Comment:  Mexican retail sales continue to trend upward.  Consumers continue to adjust to the increased sales taxes that took effect in January, and some may be encouraged by the recent rebound in Mexican exports, manufacturing activity, and construction.  However, some caution is warranted.  Consumer confidence pulled back in late summer, and the recent gains in retail activity have been much weaker than the gains during the spring.  Hiring remains tepid, and unemployment is falling only slowly.  That may be why wholesale activity is declining even in the face of the rise in sales at the retail level.  While consumer demand may keep rising, the gains going forward may be limited, and that could keep a lid on Mexican economic growth in the second half of 2014.

Patrick Fearon, CFA
Vice President, Fund Management

                                                   Mexican Retail Sales
                                          Seasonally Adjusted, 2003 = 100
                                                     Source:  INEGI
Retail Sales 1407

                                               Mexican Wholesale Sales
                                          Seasonally Adjusted, 2003 = 100
                                                       Source:  INEGI
Wholesale Sales 1407

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