Itaú BBA - MEXICO – Retail sales surprised to the upside in November.

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MEXICO – Retail sales surprised to the upside in November.

Janeiro 26, 2021

Further easing of distancing measures and the “Buen Fin” boosted retail sales.

Retail sales were above market expectations in November. Retail sales fell by 5.1% year-over-year in November, slightly below our forecast of -4.7% but better than market expectations of -6.3% (as per Bloomberg). According to figures adjusted by working days reported by the statistics institute (INEGI), retail sales contracted at a slower pace (-4.4%), taking the quarterly annual rate to -6.3% in November (from -10.1% in 3Q20). Meanwhile, private consumption key determinant, the real wage bill, improved to 0.7% year over year in November (from -0.7% in October), with formal employment recovering gradually to -3.6% (from -4.0%). Moreover, remittances converted to pesos grew at a solid pace in November (22.2% year over year). In contrast, consumption credit from commercial banks in real terms deteriorated further to -11.1% year over year in November (from -10.9% in October).

At the margin, retail sales were boosted by the “Buen Fin” effect. Using seasonally adjusted figures, retail sales posted a solid month over month growth rate of 3.3% in November, reflecting the further easing of distancing measures and the “Buen Fin” (Mexico’s black Friday) aggressive discount strategy this year. As a result, the quarter over quarter seasonally adjusted annualized rate (qoq/saar) stood at 32.2% in November. We note that retail sales remain 3.2% below February levels (pre-outbreak).



We estimate private consumption deteriorated in December and January as social distancing measures were retightened due to a sharp resurgence of the outbreak. Looking ahead, we expect private consumption to recover later in the year in line with GDP growth (we expect it at 5%).  However, the prevailing uncertainties over domestic policy direction are likely to curb the recovery, while a more prolonged lockdowns than we currently expect are also a downside risk.

Julio Ruiz



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