Mexico's retail sales ended the year on a weak tone. Data released yesterday showed that retail sales fell 1.4% m/m sa in December. The contraction was driven by a decline in sales of domestic equipment, paper and entertainment, cars, and food, among other components. In annual terms, retail sales increased 3.4% y/y.

Weak retail sales data suggests that the GDP proxy of December, due tomorrow, could be weaker than expected. Barclays expects a 0.3% m/m sa contraction, while GDP should increase 0.5% q/q sa.

"We might see a reversal of this contraction in January, as employment grew 0.4% m/m sa and ANTAD same-store sales increased 1.4% m/m sa. We expect consumption to remain strong at the beginning of the year, allowing the economy to expand modestly amid the recession in the industrial sector." said Barclays Capital.