Itaú BBA - MEXICO – Retail sales in January recovered

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MEXICO – Retail sales in January recovered

Março 25, 2020

Coronavirus outbreak to hit private consumption in 1H2020

Retail sales was broadly in line with market expectations. Retails sales expanded 2.7% year-over-year in January, above our forecast (2.4%) and slightly below market expectations as per Bloomberg of 2.8%. According to calendar-adjusted data, reported by the statistics institute (INEGI), retail sales grew at the same pace, taking the quarterly annual growth rate to 2.7% in January (from 1.9% in December).

At the margin, monthly retail sales recovered. Using seasonally-adjusted figures, retail sales expanded 0.5% month-over-month in January (from -0.4% in December), taking the quarter-over-quarter annualized rate (qoq/saar) to 2.0% in January (from -1.7% in December). The real wage bill, an important private consumption determinant, continues to expand at a solid pace (5.2% year-over-year in the quarter ended in January), despite the weakening of employment. Meanwhile, nominal consumption credit from commercial banks decelerated to 4.9% year-over-year in January (from 5.3% in December), while remittances in pesos expanded 3.1% (from -2.1%). 

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

Julio Ruiz

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