Mexican consumer confidence likely to have recovered in May

The decline in Mexican consumer confidence in April was probably a result of a loss of growth momentum in Q1. However, with low inflation helping real wage growth and the growth outlook staying positive despite the Q1 setback, we expect consumer confidence to improve throughout the year, albeit only mildly. The consumer confidence index and its seasonally adjusted variant is expected to rise to 92.4 in May (from 91.3 and 90.9 respectively in April), says Societe Generale.

These figures remain significantly below the index's cyclical peak in 2012. After bottoming in Q1 14, consumer confidence has strengthened on the back of the decline in the unemployment rate and the modest economic recovery over the past few quarters.

The biggest challenge to consumer confidence over the next few months could come from the labour market, particularly if the growth recovery proves weaker than expected.

The recent improvement in the unemployment rate has come largely on the back of a decline in the labour force, and it is possible that the labour market situation will not improve meaningfully for a few quarters yet. As a result, a sharp pick-up in consumer confidence in the near term is not anticipated, and consumption growth should therefore take time to improve from its current sub-trend rate, sugggests Societe Generale.