Mexico’s December retail sales decline, GDP growth likely to be lower than forecast

Mexico's December retail sales fell 1.4% m/m in seasonally adjusted terms. The decline was mainly due to fall in sales of domestic equipment, paper and entertainment, cars and food, among other components. The country's retail sales, in annual terms, grew 3.4%. The retail sales report for December suggests that the GDP proxy of December might be lower than expectations.

"Currently, we expect a 0.3% m/m sa contraction, while GDP should increase 0.5% q/q sa", says Barclays.

There is likelihood  that this contraction might be reversed in January, as employment increased 0.4% m/m in seasonally adjusted terms and ANTAD same-store sales grew 1.4% m/m sa. Consumption is likely to be strong in the beginning of 2016, which will permit the economy to grow modestly amidst weakness in the industrial sector.