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Real wage bill, main private consumption determinant, remains resilient.
20/06/2023 | Julio Ruiz

Retail sales expanded 3.8% yoy in April (from 1.6% in March), above market expectations of 2.5% (as per Bloomberg) and broadly in line with our forecast of 3.7%. We note the statistics institute (INEGI) changed the base of the series adjusting its methodology and coverage. According to figures adjusted by working days reported by INEGI, retail sales expanded at a faster pace (4.6%), taking the quarterly annual rate to 4.0% (from 5.3% in 1Q23). The quarterly annual rate of the key determinant of private consumption, the real wage bill, stood at a solid 7.9% yoy in April (from 7.2% in 1Q23), with formal employment growing 3.7% (from 3.6%), while nominal wages increased 11.2% (practically unchanged from 1Q23).  In turn, the quarterly annual growth rate of consumption credit from commercial banks in real terms stood at a solid 10.4% in April (from 9.6% in 1Q23), while remittances converted to pesos stood at -1.5% (from 1.4%). 


At the margin, retail sales registered a solid expansion in April of 1.5% mom/sa (after falling by 1.2% in March), but momentum is weak. The quarter-over-quarter seasonally adjusted annualized rate (qoq/saar) stood at -0.7% (from 0.3% in 1Q23).


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. 

Julio Ruiz