Mexico economy: Rebound in confidence heralds good start for 2013

Event

In December the seasonally adjusted consumer confidence index increased by 2.35%, while the unadjusted series showed an increase of 9% over the same period in 2011.

Analysis

The monthly increase reflected gains in four out of five components. The sharpest advance was in current conditions of the economy relative to a year earlier, which rose by 6% after declining by 1% in the previous month. Household conditions compared with a year earlier increased by 2.2%, after falling by 3% in November. Expectations for the economy improved by 2.65%, following a gain of 0.1%, while those for households did so by 3%, reversing the fall of 3.9% in the previous period. In contrast, appetite to purchase large-ticket items fell by 0.4%, following two strong gains of 4.8% each in the previous two months.

On an unadjusted basis, the index edged up for the third straight month, to 99 points, which was 9% higher than a year earlier, reflecting an improvement in all five components. In fact, 12-month-ahead expectations for the economy grew by 15%, the biggest gain since October 2010, while those for the household sector jumped by 18.9%, the sharpest increase since December 2010. The overall index was in fact 5 points higher than in September and 3.5 points up on June, and marked the highest level since March 2008. Bearing in mind that the series began in 2001, it was the second time that consumer confidence moved up with a change in the administration, highlighting the benefits of financial stability and reduced political risk.

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