MEXICO – Retail sales surprised to the downside in June

Still, momentum remained positive in the 2Q21

Julio Ruiz


Retail sales grew 17.7% year over year in June (down from 29.7% in May) as the favorable base effect (strict social distancing measures last year) fades away. The number was below both our forecast of 21.6% and market expectations of 20.4% (as per Bloomberg). According to figures adjusted by working days, reported by the statistics institute (INEGI), retail sales expanded at a similar pace, taking the quarterly annual rate to 25.6% in 2Q21 (from -2.9% 1Q21). Meanwhile, private consumption key determinant, the real wage bill, stood at 2.4% year over year in 2Q21 (from 0.6% in 1Q21), with formal employment recovering to 2.3% (from -2.9%). In turn, consumption credit from commercial banks quarterly annual growth rate in real terms remains soft but recovering to -10.2% in 2Q21 (from -13.2% in 1Q21). Finally, remittances converted to pesos grew at a still solid 13.1% in 2Q21.

At the margin, retail sales deteriorated in June, but momentum remained positive in 2Q21. Using seasonally adjusted figures, retail sales fell by 0.6% month over month in June, taking the quarter over quarter seasonally adjusted annualized rate (qoq/saar) to 12.2% in 2Q21. 

We expect private consumption to continue to recover during the rest of the year assuming a limited impact from the resurgence of the outbreak. While federal authorities announced tighter social distancing measures since the second half of July, mobility measures seem relatively unaffected for now (suggesting also local authorities are being more lenient with national social distancing measures).

Julio Ruiz