Itaú BBA - MEXICO – June’s retail sales deteriorated at the margin

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MEXICO – June’s retail sales deteriorated at the margin

agosto 21, 2019

The real wage bill is still helping to smooth the slowdown in private consumption

Retail sales was below market expectations in June. Retails sales grew 1.0% year-over-year in June (from 2.8% in May), below our forecast (2.3%) and market expectations as per Bloomberg (1.8%). According to calendar-adjusted data, reported by the statistics institute (INEGI), retail sales grew 1.7% year-over-year in June (from 2.8% in May), taking the 2Q19 growth rate to 2.3% (from 1.2% in 1Q19).

Although retail sales expanded at a decent pace in 2Q19 at the margin, the month-over-month figure was weak. Using seasonally-adjusted figures, retail sales contracted 0.5% month-over-month in June, taking the qoq/saar to 5.6% in 2Q19 (from 2.6% in 1Q19). The real wage bill, an important determinant of private consumption,  is starting to lose strength due to the weakening of employment (formal employment: 1.6% qoq/saar in 2Q19, from 2.2% in 1Q19), as the qoq/saar rate stood at 2.8% in 2Q19 (from 11.8% in 1Q19). Nevertheless, the real wage bill is still helping to smooth private consumption slowdown.

We expect private consumption to moderate its pace in 2019 (relative to 2018), as the U.S. deceleration and uncertainties facing the economy curb activity expansion. In this context, employment is weakening. 


Julio Ruiz



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