Mexico Outlook – Update
The latest Citibanamex survey showed median forecasts for headline and core inflation in November at 0.82% and 0.29%, respectively. If these estimates are accurate, annual headline and core inflation will stand at 3.3% and 3.4%, compared to 3.1% for both headline and core in October. Our projections are largely in line with market expectations at 0.80% mom (headline) and 0.28% mom (core), which would result in annual prints of 3.3% for both measures. The government will release November inflation figures tomorrow at 9:00am EST. Meanwhile, consumer confidence fell to 84.9 in November from 85.6 in October (seasonally adjusted), the lowest reading since January 2013, right after the congressional approval of a controversial fiscal reform. Consumer confidence has fallen in sequential terms in four of the past five months (in seasonally adjusted terms). Three out of the five sub-indices fell in November. In particular, there was a notable deterioration in consumers’ perception of their purchasing power and of their personal and the country’s economic situation a year from now. In turn, consumers’ perception of the country’s and their own present economic situation showed a slight improvement. Concerns about the future seem to have increased, likely driven by the presidential election results in the US and the anxiety regarding the future of US-Mexico relationships, in our view. Finally, data from the vehicle industry showed a positive performance in November. According to our seasonal adjustment of original data, vehicle output rose 6.8% mom in November, recovering from a 2.7% mom contraction in October. Additionally, vehicle exports increased 3.4% mom in November, following a 3.4% mom decline in the previous month. On a twelve-month basis, vehicle output and exports rose 7.4% and 9.6%, respectively. In the first eleven months of 2016, vehicle output has increased 1.7% yoy, while exports are unchanged relative to the same period last year. Roughly 79% of vehicle output in 2016 has been for the export market.