Despite External Trade Tension, Mexican Consumers Continue Spending
Although external trade tension in Mexico during March may have affected consumer sentiment, it did not translate into reduced spending. Retail sales grew by 0.5% in March compared to February, extending a chain of five consecutive monthly advances and nearing the recovery of ground lost since its last historical peak.
Retail Sales Index and Employment Trends
The retail companies’ revenue index stood at 119.4 points in March, just 0.7% below the November 2023 record of 120.2 points. The gap narrowed from -4% in January 2024, according to the Inegi’s Monthly Survey of Commercial Companies (EMEC).
However, the seasonally adjusted index of consumer confidence constructed by Inegi decreased by 0.4 points monthly and 1.3 points annually, continuing a decline since November 2024 and reaching its lowest level since October 2023. This occurred amid uncertainty about the adverse effects of tariffs on Mexican exports to the United States.
Positive Employment and Wage Trends
Despite the uncertain trade environment, employment rebounded with the addition of over 560,000 formal and informal positions following a loss of nearly 280,000 jobs in February, according to the Inegi’s National Occupation and Employment Survey.
Formal employment wages continued to recover, with an average daily pay of 619.3 pesos, marking a nominal growth of 7.6% and a real growth of 3.3%, as per the Mexican Social Security Institute (IMSS) data.
Meanwhile, remittances from abroad grew 2.7% annually to reach 5,150 million USD.
Discretionary Spending Drives Sales
Of the 22 merchandise categories and sales channels measured by EMEC, 14 showed monthly improvements in March. Notable gains were observed in discretionary consumption categories.
- Perfumery and jewelry (+7.9%)
- Clothing, accessories, and wearing apparel (+5.7%)
- Home furnishings and other household items (+4.5%)
- Internet and printed catalogs (+3.0%)
- Textile products (excluding clothing) (+2.8%)
Declines were seen in computer and telephone equipment and accessories (-8.6%), automotive parts and repair items (-5.6%), as well as basic consumption categories like groceries and food (-1.7%) and beverages, ice, and tobacco (-1.4%).
Accumulated Growth
During the first quarter of 2024, retail sales revenue accumulated a growth of 2%, contrasting with the 0.1% decline during the same period in 2024.
This uptick aligns with the interannual growth of 0.6% in Gross Domestic Product (GDP), as per Inegi’s preliminary estimate. Moreover, there was an intertrimestral improvement of 0.2%, allowing for the avoidance of a technical recession, as the GDP had fallen 0.6% in the last quarter of 2024 compared to the preceding trimester.
Key Questions and Answers
- Q: How did retail sales perform in March 2024? A: Retail sales grew by 0.5% in March compared to February, extending a chain of five consecutive monthly advances.
- Q: What were the trends in consumer confidence and employment during this period? A: Despite a decrease in the seasonally adjusted index of consumer confidence, employment rebounded with the addition of over 560,000 formal and informal positions.
- Q: Which merchandise categories experienced growth in March? A: Discretionary consumption categories, such as perfumery and jewelry, clothing, accessories, home furnishings, internet services, and textiles (excluding clothing), saw notable gains.
- Q: How did accumulated retail sales growth compare to 2024’s first quarter? A: Retail sales revenue accumulated a growth of 2% during the first quarter of 2024, contrasting with the 0.1% decline during the same period in 2024.
