Economics: Private consumption sustains momentum through April and May
Last week saw the release of aggregate supply and demand figures showing that private consumption increased 4.5% in the first quarter, a result congruent with the firm GDP growth reported for the same period (3.7%). Even greater increases were reported in consumption of durable and semi-durable goods (7.9%) and services (5.9%), while spending on non-durable goods increased by a comparatively subdued 2.1%.
According to the monthly private consumption index, consumption growth has been concentrated in imported goods and services, which increased in April by 10.0% and 4.8% year on year, respectively, at the same time as consumption of domestic goods fell 0.2% in the same period.
But there were also signs of weakness in these reports. Growth in household spending on goods of domestic origin has slowed in recent months in contrast to surging demand for imported goods that can be explained in large part to the peso’s extended appreciation trend. Also, some indicators suggest that durable goods consumption could slow down in the second half of the year.
An Inegi report showed retail sales revenues increased an annual 4.6% in April with growth most pronounced in the case of sales of groceries and food, and apparel footwear, as well as at supermarkets, while there was a contraction in categories such as furniture and computer equipment, as well as in the sales of cars and light trucks, with the follow-off in the last of these categories potentially marking an end to the post pandemic auto sales boom.
In line with the increase in consumption, employment and labor income, consumer credit issued by banks continued to grow significantly in real terms, despite higher interest rates.
Now read on...
Register to sample a report