Mexico’s consumer sentiment likely to have deteriorated further in December

Mexican consumer sentiment continues to struggle in spite of robust labor market. Due to deteriorating expectations for business conditions, Mexican consumer sentiment has dropped to its worst level in more than six years. Given the still-strong labor market, it might be argued that this sharp fall is linked to trade policy discussion in the U.S. with possible implications for Mexico’s trade and businesses.

There is also the likelihood that the slowdown in growth outlook and the recent increase in inflation or the depreciation of the peso has taken a toll on consumer sentiment, said Societe Generale in a research report. The estimated pace of fall in the overall index translates into an index value of 84.2 in December, and the near-term movement in sentiment would possibly be subject to changes to U.S. trade policies. Lower sentiment and higher inflation might impact consumer spending growth in the coming quarters, according to Societe Generale.