MexECON Blog

Consumer Confidence Rebounds Further

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 statistics agency.

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 months. 

Patrick Fearon, CFA
Portfolio Manager

Consumer Confidence 1506

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