Mexico's stalled consumer confidence, but consumption not to be bad this year

Improvement in Mexico's consumer confidence stalled over the past 2-3 quarters and the index remains nearly 4-5% lower than its cyclical peak of 2012-13 despite some improvement in labour market conditions, and the economy getting closer to its trend growth once again this year.

The index is considerably lower than its all-time peak seen in 2005-06, which is more understandable considering some uncertainties over growth and relatively low wage growth.

The index is expected to tick-up marginally in June to 92.5. The seasonally adjusted index should improve to 92.4 in June. Most of the weakness in the index could be seen in the "confidence about business" and the "plan to make important purchases" categories while households' current economic situation is seen to be in relatively better shape than other components. 

Given the current mood of consumers as reflected in the confidence index it is safer to assume that consumption will be a lagging component to demand side GDP. However, this is bit surprising given better than expected pick-up in consumption growth so far this year.