MexECON Blog

Consumer Confidence Rises Further

Mexico's March consumer confidence index rose to a seasonally-adjusted 93.0, compared with revised readings of 92.9 in February and 92.1 in January.  According to the report, the rise in March reflected increases in four of the five subindexes.  The subindex on consumers' willingness to buy durable goods rose strongly for a second straight month, reaching a nearly three-year high of 86.5.  The subindex on consumers' future expectations for the country as a whole edged up to 89.6, and the subindex on their view of the current situation for the country rose to 90.2.  The subindex on consumers' view of the current situation for their own family increased to 100.0.  In contrast, the subindex on consumers' future expectations for their own family fell back to 100.1.

Comment:  Mexico's consumer confidence index is designed so that readings of 100 reflect the level of optimism in 2003.  While the index fell sharply ahead of the new sales taxes that took effect in January 2014, it has been trending upward ever since.  One key reason for the ongoing recovery is that unemployment has been falling significantly since last summer.  There is little evidence that the improved labor market has boosted wages, but against a backdrop of moderating inflation, the expansion of employment is clearly benefitting consumers.  As long as Mexican exports, manufacturing, and private investment remain relatively strong, that is likely to continue, though confidence could falter again if consumers become more concerned about the weak peso, low oil prices, and the government's effort to respond to those prices by cutting spending.

Patrick Fearon, CFA
Portfolio Manager

Consumer Confidence 1503

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