Modest recovery of Mexico retail sales likely in H1 15 : Barclays

Quotes from Barclays Capital:

- Mexico retail sales decreased 0.8% m/m sa in Dec driven by a reduction in the apparel, food, vehicles and paper and entertainment sales, which were offset by a strong report in domestic equipment, hardware and internet sales.

- The mixed nature of the report suggests that the sector is still struggling to recover; in fact, retail sales contracted 1.1% 3m/3m in Q4 14 and supermarket and departmental sales practically remained stagnated during 2014, by increasing only 0.6% y/y.

- We expect a very modest recovery of this sector in H1 15 as we still need to observe the final effects of the fiscal reform in Q2 as firms and households are required to report their annual incomes to the IRS and internalize the total impact of the reform in disposable income. As this has been a permanent decrease in disposable income, consumption will slowly recover only as long employment continues growing.