| | |  Business News | March 2009 
Mexico Consumer Confidence May Drop, Hurting Sales
 Jens Erik Gould - Bloomberg
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 |  | Companies are trying to attract clients by lowering prices. Consumers are more cautious in their purchases.
- Marisol Huerta |  | | |
Mexico’s consumer confidence may tumble to a record low as increasing layoffs and falling remittances lead shoppers to cut back on spending.
The index may fall to 80 in February from 81.9 the previous month, according to the median of eight economists surveyed by Bloomberg. The indicator measures Mexicans’ perception of the economy, their financial situation and whether they consider it a good time to spend on durable goods. The report will be released March 5.
Mexico’s retail sales had their biggest drop in more than six years in December and gross domestic product in the fourth quarter had its first contraction since 2003. As a result, retailers such as Fomento Economico Mexicano SAB, Mexico’s largest beverage company, foresee falling demand for their products.
“Consumer activity softened across our markets,” Javier Astaburuaga, chief financial officer at Femsa, said in a Feb. 26 conference call on fourth-quarter results. “The data coming from our three businesses in the fourth quarter increasingly pointed to a deteriorating consumer environment that has obviously made us cautious about 2009.”
Femsa, which runs Coca-Cola, beer and retail units, said last week that profit fell 78 percent in the fourth quarter because of lower beer shipments and a foreign-exchange loss related to the peso’s decline. Beer shipments in Mexico fell 0.7 percent, the company said.
“Companies are trying to attract clients by lowering prices,” Marisol Huerta, an analyst at Actinver SA in Mexico City, said about firms including Wal-Mart de Mexico SAB, Latin America’s largest retailer. “Consumers are more cautious in their purchases.”
Peso, Stocks, Bonds
Mexico’s benchmark Bolsa index fell 3.1 percent last week to 17,752.18. Organizacion Soriana SAB, Mexico’s second-largest retailer, fell the most in at least 14 years in Mexico trading on Feb. 27 after reporting a 72 percent decline in fourth-quarter profit. Soriana fell 2.89 pesos, or 13 percent, to 19.96 pesos, the biggest one-day decline since at least Nov. 3, 1994.
Yields on Mexico’s benchmark bond due December 2024 rose 18 basis points during the week to 8.84 percent. The bond’s price fell 1.63 centavos from the previous week to 109.77 centavos per peso, according to Banco Santander.
The peso last week weakened 3.13 percent to a record 15.2550 per U.S. dollar, compared with 14.7774 on Feb. 20.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9(at)bloomberg.net. |
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