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Private consumption main determinant, the real wage bill, expanded at a solid pace
19/04/2023 | Julio Ruiz

Retail sales growth slowed to 2.5% yoy in March (from 3.4% on February), below our forecast of 3.4% and market expectations of 2.9% (as per Bloomberg). According to figures adjusted by working days reported by the statistics institute (INEGI), retail sales expanded at the same pace, taking the 1Q23 annual rate to 3.7% (from 2.9% in 4Q22). The key determinant of private consumption, the real wage bill growth, stood at a solid 7.2% yoy in 1Q23 (from 6.7% in 4Q22), with formal employment growing 3.6% (from 3.8%), while nominal wages increased 11.2% (from 11.0%).  In turn, the quarterly annual growth rate of consumption credit from commercial banks in real terms stood at a solid 9.6% yoy (from 8.8% in 4Q22), while remittances converted to pesos stood at 1.3% (from 3.5%). 


At the margin, retail sales registered a null expansion in March, but momentum remained positive. The quarter-over-quarter seasonally adjusted annualized rate (qoq/saar) stood at 7.0%  (from 2.3% in 4Q22).



Our GDP growth forecast for this year stands at 2.4%. In our view, the economy will cool down in the last three quarters of this year, slowed by a softer U.S. economy, after still-decent GDP growth in 1Q23.