Mexico: Consumer confidence heads up further in April
May 8, 2017
Sentiment among Mexican consumers strengthened for a third month running in April on the back of a stabilization in gas prices and a softer tone from U.S. officials regarding trade with Mexico. The unadjusted index of consumer confidence produced by the Statistical Institute (INEGI) rose from 81.0 in March to 83.8 in April, a four-month high and just below the figure seen prior to the U.S. presidential election. The increase confounded market analysts, who had expected the headline figure to edge down to 80.0.
While still low by historical standards, improvements in consumer confidence were observed across all components. Households noted better expectations for the current economic situation and also saw their economic standing in the next 12 months reaching a nine-month high in April. Likewise, consumers signaled less pessimism regarding the country’s current economic situation and future economic expectations.
April’s result highlights resilient dynamics among Mexican households. Earlier in the year, a one-off hike to gas prices and increased uncertainty linked to the new U.S. administration had caused consumer sentiment to nosedive. Nonetheless, recent hard data—most importantly an acceleration in GDP growth in the first three months of the year—showcase the limited effect this has had on hard data. This spells good news for the economy’s outlook, while improvements in survey-based data are likely to see private spending and retail sales gathering steam in the months to come. In fact, upbeat sentiment was reflected in consumers’ increased propensity to purchase big-ticket items in April.
Author: David Ampudia, Economist