Mexico retail sales-strong pace but a deceleration is in sight

Mexico's retail sales increased 1.1% m/m sa in June as a result of incremental gains in healthcare, food, domestic equipment, car and apparel sales. Only hardware and superstore sales posted monthly declines.

These data come later than the GDP print but highlight the strength behind the services sector performance in Q2, as retail expanded 2.4% 3m/3m saar. However, this pace is slower than the expansion observed in Q1 (9.7%) (see Slower growth path pushes our rate hike expectations).

"We recently downgraded our GDP forecast to 2.2% and 2.4% for 2015 and 2016, respectively, as we expect a deceleration of the services and manufacturing sectors. In particular, the lower spending after the elections is behind the expected deceleration and should be reflected in retail sales during Q3",says Barclays.