Mexico's September retail sales growth likely to average a strong 5.3% yoy

Mexico's average retail sales trended up this year, despite the growth weakness in the first half of the year and labour market slowdown, partially because of low base effects from first half of 2014, and mostly on this year's lower inflation.

The pace of retail sales in recent times is in line with the 3-4% private consumption spending, albeit the correlation between the retail sales and overall consumption growth is not that strong enough.

Overall consumption did not reflect the strong sales growth in 2011-2012, and more lately, the sales growth was ahead of consumption, despite of its improvement.

"Based on our September projection (5.8% yoy, -0.7% mom), retail sales growth would average a strong 5.3% yoy year-to-date compared with 2.7% in 2014", anticipates Societe Generale. 

However, due to this year's low inflation, the consumption growth would likely improve. In first half of 2016, if the consumption growth recedes, labour market should be able to support the consumption acceleration.

Currently, the labour market and consumption outlook seems positive, expecting some positive growth in investment and exports.