Mexico's June consumer confidence index rose to a
seasonally-adjusted 93.8, compared with revised readings of 92.0 in
May and 91.4 in April. With the rise in May and June,
the index now stands at its highest level since last
November. According to the report, the rise in June reflected
increases in four of the five subindexes. Most significantly,
the subindex on consumers' willingness to buy durable goods jumped
to 87.4, reaching its highest level in more than three years.
The subindex on consumers' future expectations for the country as a
whole rose strongly to a five-month high of 91.6, and the subindex
on their view of the current situation for the country increased to
a seven-month high of 90.8. The subindex on consumers' future
expectations for their own family increased to 101.2, but the
subindex on their view of the current situation for their family
edged down to 98.7.
The report was released on Tuesday by INEGI, the official
Comment: Mexico's consumer
confidence index is designed so that readings of 100 reflect the
level of optimism in 2003. During the initial stages of
Mexico's current economic expansion phase, from 2009 to early 2013,
the index rose strongly. However, it then pulled back
dramatically as the government prepared to increase sales taxes at
the beginning of 2014. Once consumers began to adjust to the
new taxes, optimism again began to rebound, but softer economic
activity during the winter led to another partial pullback.
It now appears that optimism may be on the upswing again.
It's a bit too early to know for sure, especially with challenges
such as the crisis in Greece and the continued decline in the value
of the peso. Nevertheless, I suspect that reaccelerating
exports and the big drop in Mexico's unemployment rate over the
last year will help boost confidence even further in the coming
Patrick Fearon, CFA