Mexican retail sales slow in second quarter

Strong fundamentals underpinned retail sales in Mexico during the month of June, but analysts cautioned that a small slowdown in activity was evident in the data, pointing to downside risks for economic growth in the third quarter.

Retail sales jumped by 1.0% month-on-month and were 9.4% higher on the year-ago period (consensus: 7.0%), versus a gain of 8.6% in May.

A healthy labour market, low inflation and positive credit conditions all contributed to June's reading, according to Andrew Abadia, senior international economist at Pantheon Macroeconomics.

Abadia highlighted the strong showing put in by the "key" supermarket and department store sales component, which edged higher by 0.4% in comparison to the month before. Auto sales were also strong, clocking in with an increase of 1.6%, he said.

However, in terms of quarter-on-quarter rates of change retail sales slowed from the 3.8% pace seen during the first three months of the year to a 2.5% clip.

"This does not imply a sharp moderation in consumers’ spending, though, but points to downside risk to Q3 GDP data, following the steep fall in consumers’ sentiment since late last year," Abadia said.