Itaú BBA - MEXICO – Retail sales deteriorated in February

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MEXICO – Retail sales deteriorated in February

Abril 23, 2020

Retail sales growth pace was weak before COVID-19

Retail sales grew at a weak pace before COVID-19. Retails sales expanded 2.5% year-over-year in February, above our forecast (1.6%) and slightly below market expectations as per Bloomberg of 2.8%. However, the figure was boosted by a positive calendar effect. In fact, according to figures adjusted by working days, reported by the statistics institute (INEGI), retail sales contracted 0.3% year-over-year (from 2.6% in January), taking the quarterly annual growth rate to 1.9% in February (from 2.6% in January).

At the margin, retail sales deteriorated. Using seasonally-adjusted figures, retail sales contracted 1.1% month-over-month in February (from 0.4% in January), taking the quarter-over-quarter annualized rate (qoq/saar) to -1.3% in February (from 1.0% in January). Private consumption slowed down despite an improvement in the real wage bill (5.1% qoq/saar in February, from 4.4% in January), the most important private consumption determinant and an expansion of remittances in pesos of 8.4% (from 3.1%) boosted, in part, by the depreciation of the currency. On the contrary, nominal consumption credit from commercial banks slowed down slightly to a weak pace (4.8% year-over-year in February, from 4.9% in January).

We expect private consumption to deteriorate sharply in the first half of 2020 due to the negative impact from the coronavirus outbreak, recovering in the second half of the year.

Julio Ruiz

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