Mexico: Pre-election jitters hold back consumer confidence gains in April
Consumer sentiment rose more than expected in April as strengthening economic fundamentals appeared to foster an improved outlook among survey participants. The seasonally-adjusted index of consumer confidence produced by the Statistical Institute (INEGI) hit a four-month high of 86.5 in April from a revised 84.7 in March (previously reported: 84.5), reversing four months of losses. Despite falling inflation and a tight labor market, the index remained low by historical standards—likely weighed down by recent political uncertainty ahead of the 1 July general elections.
April uptick reflected a broad-based improvement across categories, with assessments of current and future economic conditions posting the strongest gains. Milder gains were recorded in consumers’ assessments of their current and future household economic conditions, in line with easing inflationary pressures and solid remittance inflows in recent months. Views on big-ticket purchases also ticked up in the month, suggesting real wages have seen some lift at the labor market has tightened.
Consumer confidence has been one of the last holdouts, failing to significantly improve despite broad improvement across most consumer-related fundamentals since the outset of the year. Moreover, the eventual turnaround in consumer sentiment appears unlikely until this year’s general elections and NAFTA talks are settled, which ought to bring about a pick-up in household spending and a recovery in business investment.