Mexico's private consumption still healthy in spite of the weak end to 3Q15

The sales undershot expectations, sliding 1.1%m/m. However, the drop comes after a 1.5% jump August and average monthly gains of 0.9% in the four months through August. Thus, despite this week's disappointment, trend sales growth remained quite robust at 9.3%, saar in 3Q after solid gains exceeding 6% annualized, on average, in the preceding two quarters. 

On an over-year-ago basis, September sales growth also was well below expectations, printing at 4.9%. But again, this is still a healthy reading and virtually in line with 5.2% year-to-date gain. The September drop leaves retail sales on a weak footing going into the current quarter, but the broader positive outlook for private consumption is unaltered. Low inflation, firming employment, and rising real wages all support private consumption. 

Furthermore, solid remittances growth (particularly in MXN terms) and the upward shift in consumer credit growth are also boosting consumption. Thus, private consumption will remain one of the main sources of growth this year and in 2016.