Itaú BBA - MEXICO – Retail sales surprised to the downside in October

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MEXICO – Retail sales surprised to the downside in October

Dezembro 20, 2019

At the margin, retail sales contracted sharply on a monthly basis

Retail sales was below market expectations. Retails sales grew 0.4% year-over-year in October  (from 2.4% in September), below our forecast (3.1%) and market expectations as per Bloomberg of 2.1%. According to calendar-adjusted data, reported by the statistics institute (INEGI), retail sales grew at a slower pace (0.3% year-over-year in October, from 2.5% in September), taking the quarterly growth rate to 1.7% in October (from 2.2% in September).

At the margin, retail sales contracted sharply on a monthly basis. Using seasonally-adjusted figures, retail sales contracted 2.3% month-over-month in October (from 1.1% in September), taking the quarter-over-quarter annualized rate (qoq/saar) to zero in October (from 1.3% in September). While the real wage bill (5.2% year-over-year in the quarter ended in October), an important determinant of private consumption, stood resilient, despite the weakening of employment, other private consumption determinants decelerated. In particular, nominal consumption credit from commercial banks stood at 5.9% year-over-year in October (from 5.8% in September and down from 6.2% in June), while remittances in pesos decelerated to 13.8% in the quarter ended in October (from 17.5% in 3Q19). 

We expect private consumption to moderate its pace in 2019 (relative to 2018), as the U.S. deceleration and uncertainties facing the economy curb activity expansion. In this context, employment is weakening. 
 

Julio Ruiz
 



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