Mexico: Consumer confidence improves in July
August 3, 2017
Sentiment among Mexican consumers continued to climb in July, reaching a one-year high following months of improvement in the wake of January’s inauguration of U.S. President Donald Trump, when confidence had slumped. The seasonally-adjusted index of consumer confidence produced by the Statistical Institute (INEGI) rose to 86.6 in July—the highest reading since last July—from 85.1 in June.
The report showed increases across the board. Consumers’ assessment of both the current and future economic situation improved over the previous month, the result of robust labor dynamics and fading concerns over external threats ahead of talks to renegotiate NAFTA. More strikingly, Mexicans’ propensity to purchase big-ticket items rose notably in July, which was at odds with multi-year high inflation and hard data suggesting a cooling off in private consumption. Meanwhile, households’ perceptions of their current and future economic situations also improved markedly in the month.
Although the index remains subdued by historical standards, the gradual but steady improvement in consumer confidence seen since January highlights the resilience of the Mexican domestic economy. In addition, a recent report showed a modest improvement in government approval rates, which likely reflected upbeat consumer sentiment in July. However, future confidence readings will be largely dependent on how NAFTA talks play out in August.
Author: David Ampudia, Economist