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Mexico: Unexpected improvement - consumer confidence low

Staff Writer |
In October, the unadjusted index of consumer confidence produced by INEGI inched up to 85.0 from 84.2 in September.

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The result contrasted market expectations, which had the indicator falling further to 83.3. Adjusted for seasonal factors, consumer confidence rose 0.9% from the previous month, which marked the first increase after three consecutive months of decline.

Despite the mild increase, consumer confidence remains depressed at a multi-year low.

The low headline figure continues to reflect Mexican households’ disenchantment with both their own economic situation and the country’s current economic situation.

The silver lining this month came from the expectations sub-components, with consumers reporting slightly more upbeat sentiment towards both their own economic prospects and the country’s future economic situation. Also, households deemed this a good moment to purchase big-ticket items.

Analysts suggest that consumers’ downbeat mood is largely influenced by non-economic factors, such as the government’s poor popularity, concerns about the rule of law and the ongoing peso depreciation—which consumers tend to associate with a deteriorating economic situation.

Panelists participating in this month’s LatinFocus Consensus Forecast expect private consumption to grow 2.7% in 2016, which is unchanged from last month’s projection. For 2017, the panel sees private consumption expanding 2.8%, which is also unchanged from last month’s projection.

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