MexECON Blog

Consumer Confidence Stages Partial Rebound

Mexico's May consumer confidence index rose to a seasonally-adjusted 91.5, after falling to a revised 91.1 in April.  According to the report, the partial rebound in May came in large part from a jump in the subindex on consumers' assessment of the current situation in the country as a whole.  That subindex rose to 88.4.  In addition, the subindex on consumers' view of the current situation for their own family rose to 98.9, and the subindex on their future expectations for their family increased to 99.9.  The May subindex on consumers' willingness to buy durable goods rose smartly to 83.5.  With these increases, all of these subindexes reversed their declines in April, though they were no higher than their readings in February and March.  In contrast, the May subindex on consumers' future expectations for the country was essentially unchanged at 88.5.

The report was released earlier this month 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.  While the index had been trending upward since early 2014, it has been giving up ground for the last several months.  The decrease in optimism probably reflects Mexico's recent lull in exports, manufacturing, construction, and government spending, as well as a round of local and state elections that were recently concluded and the likelihood of higher interest rates in the United States later this year.  Those factors have been more than enough to offset the positive impact of declining unemployment.  The question is whether the challenges will continue to weigh on optimism, or whether the partial rebound in confidence during May is a sign of better sentiment going forward.  In my view, the economic challenges will take a bit longer to subside, so optimism could remain soft for a while yet.  Nevertheless, I still suspect that the headwinds will eventually subside, which should prompt better consumer confidence and spending in the coming months.

Patrick Fearon, CFA
Portfolio Manager

Consumer Confidence 1505

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