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Mar 11, 2016 10:15 AM ET

Archived: Goldman, Sachs & Co. – Mexico: Weak Business and Consumer Confidence Indicators; Mixed PMIs

iCrowdNewswire - Mar 11, 2016

Consumer confidence posted a broad based 1.2% mom sa decline in February, more than fully offsetting the 0.7% mom sa increase recorded in January.

The index measuring the current situation of the individual household declined 0.5% mom sa and the index measuring the perception about the future situation of the household recorded a larger 1.3% mom sa drop. Furthermore, the index assessing consumers’ perception of the current economic picture posted a large 3.3% mom sa decline and the forward looking index assessing expectations with regards to the outlook for the economy posted a 1.0% mom sa decline. Finally, the index measuring the current capacity of households to buy durable goods compared with a year ago posted a 2.2% mom sa decline.

Business confidence in the manufacturing sector declined by 0.9pt in February (to 47.7; the lowest level since Jan 2010), adding to the -1.3pt variation recorded in January. The overall index has now declined for four consecutive months and is now well below the 50 pessimism/optimism.

The decline of business confidence in February was broad based. The index assessing whether this is the right moment to invest declined 1.5pt, to a low 36.1. Furthermore, the indices measuring current individual business conditions and sentiment with regards to the current economic picture declined by 0.3pt and 0.9pt, respectively, adding to the decline recorded in January. In addition, the forward-looking indices assessing sentiment with regards to the outlook for individual business (-0.4pt) and overall sentiment with regards to the economic outlook (-0.4pt) have also deteriorated further at the margin.

Finally, the three February manufacturing PMIs (Inegi (+0.2pt); Markit (+0.8pt); and IMEF (-0.3pt)) sent mixed signals (and remain slightly above the 50 expansion/contraction threshold) and the IMEF Services PMI declined 0.4pt to 50.4, and is now barely above the expansion threshold.

The broad based weakness in both consumer and business sentiment indicators bodes ill for an economy that is currently excessively dependent on the impulse from private consumption. The headwinds to activity have increased visibly in recent months (e.g., fiscal adjustment drag, declining oil production, soft external demand for manufacturing products, etc.). This could lead to further deterioration of sentiment.

KEY NUMBERS (February):

Consumer Confidence: -1.2% mom sa.

Business Confidence in the Manufacturing Sector: -0.9pt (to 47.7).

Inegi Manufacturing PMI: +0.2pt to 52.0

Markit Manufacturing PMI: +0.8pt to 53.1

IMEF Manufacturing PMI: -0.3pt to 51.3

IMEF Services PMI: -0.4pt to 50.4



Goldman Sachs


Alberto Ramos

+1 212 357-5768
Goldman, Sachs & Co.


Contact Information:

Alberto Ramos

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