Mexico | Consumption lost ground in October due to lower spending on goods

The BBVA Research Big Data Consumption Indicator reported 0.8% MaM growth in October, 0.8 pp below the figure registered in September

Key points

• Key points:
• While the broad-based growth of the tertiary sector during 3Q24 (0.9% YoY) suggests relative resilience of retail sales, other indicators suggest that the momentum could be temporary, if an increasingly large proportion of private spending is driven by lower savings.
• According to Banxico data, the balance of household deposit accounts, in the financial system, is 3.6% below its pre-pandemic trend (after having reduced the gap to 1.4% in March), while the real wage bill has deepened its slowdown, registering a real variation of 5.8% YoY (sa), the lowest since December 2021.
• Regarding the services component (1.2% MaM), tourism-related sectors contracted for the first time since July; restaurant consumption fell (-)8.2%, while hotel spending contracted (-)6.2%. Regarding goods spending (0.5% MaM), food spending fell (-)2.6% during the period, 5.7 pp below the figure registered the previous month.
• We believe that private consumption faces a challenging outlook in the coming months, in an context of weak formal employment growth and lower savings; the slow growth of the real wage bill could extend into the coming quarters if lower investment growth continues in a context of uncertainty regarding the recently approved judicial reform and potential modifications to the tariffs imposed on Mexican imports in the US.

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