Retail sales grew 5.3% yoy in January (from 2.5% in December), above our forecast of 3.5% and market consensus of 3.2% (as per Bloomberg). According to figures adjusted by working days reported by the statistics institute (INEGI), retail sales expanded at a slightly slower pace (5.1%), taking the quarterly annual rate to 3.3% in January (from 2.9% in 4Q22). The key determinant of private consumption, the real wage bill growth, stood at a still solid 6.7% yoy in the quarter ended in January (practically the same pace from the 4Q22), with formal employment growing 3.6% (from 3.8%), while nominal wages increased 11.1% (from 11.0%). In turn, the quarterly annual growth rate of consumption credit from commercial banks in real terms stood at a solid 9.0% yoy (from 8.8% in 4Q22), while remittances converted to pesos slowed to 1.8% (from 3.5%).
At the margin, retail sales also posted a solid expansion. Using seasonally adjusted figures, retail sales grew 1.6% mom, taking quarter-over-quarter seasonally adjusted annualized rate (qoq/saar) to 4.2% in January (from 2.7% in 4Q22).
We expect GDP growth of 1.8% for 2023. January’s retail sales figure is consistent with a still decent GDP expansion in 1Q23, but activity is likely to cool down more clearly in the last three quarters of this year dragged by a softer U.S. expansion.