MexECON Blog

Consumer Confidence Cools in December

Mexico's December consumer confidence index pulled back to a seasonally-adjusted 93.0, after surging to a revised 95.0 in November.  Even with the decline, however, the index remained above its previous readings of 91.7 in October and 91.0 in September.  According to the report, the fall in December came in large part from a sharp decrease in the subindex on consumers' future expectations for the country as a whole.  That subindex fell to 89.7, reaching its lowest level since last August.  The subindex on consumers' view of the current situation for the country as a whole fell to 90.9, also marking its lowest level since August.  In contrast, consumers' assessment of the situation for their own family improved for the fifth straight month in December.  The subindex on their view of the current situation for their own family rose to 100.5, and the subindex on their future expectations for their own family edged up to 101.5.  The subindex on consumers' willingness to buy durable goods jumped to 84.6, for its highest reading since mid-2012.

The report was released on Friday 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 index fell sharply over the course of 2013, mostly in anticipation of new sales taxes scheduled to take effect in January 2014, but the index has risen strongly since then, as consumers adjusted to the new taxes.  The jump in optimism during November was particularly strong, so the modest pullback in December does not seem too alarming.  Since the December decline was focused on consumers' feelings about the country as a whole, I suspect that it primarily reflected concern about the recent steep declines in global oil prices and in the value of the peso.  I am encouraged by the continued gains in the subindexes tracking consumers' feelings about their own family's situation.  Those gains suggest that consumers are reaping real benefits from the gradual decline in Mexican unemployment.  If the labor market continues to strengthen, the improvement in optimism should boost consumption spending and help support stronger economic growth.

Patrick Fearon, CFA
Vice President, Fund Management

Consumer Confidence 1412 A

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