Private consumption grew 9.1% in January-August: BBVA Research

Mexico City. Private consumption in the first eight months of the year grew 9.1 percent compared to the same period in 2023, a figure that, while positive, also showed weakness compared to the figure recorded in the same period, according to an analysis by BBVA Research.

According to the BBVA Research Big Data Consumption Indicator, household spending in Mexico increased by 2.1 percent in August compared to July.

However, between January and the eighth month of 2024, the measurement showed a growth of 9.1 percent, a figure that was 2.3 percentage points lower than the same period of the previous year, a figure that according to analysts shows a sluggishness or weakness.

“We expect that the slowdown in real wages, given the lower job creation in the industrial sector, will prolong the sluggishness of private spending this year,” they said.

They noted that according to IMSS figures, the number of workers affiliated with this institution reported an average year-on-year variation of 8.0 percent in the first eight months of 2024, a figure that translated into a decrease of 1.7 percentage points compared to that recorded in the same period of the previous year.

“We expect the sluggishness of private consumption to continue for the rest of the year, in an environment of low growth in formal employment,” the analysts said.

They considered that the slowdown in domestic demand in the second half of 2024 will define a low starting point for economic activity growth in 2025, which faces a gloomy outlook for domestic demand, in particular, with respect to gross fixed investment.

The measurement indicates that in the first eight months of the year, consumption of goods grew 8.8 percent at an annual rate, a result that was 1.7 percentage points below the figure recorded in the same period of 2023.

Spending on services grew by 11.2 percent between January and August, 3.8 percentage points higher than the figure recorded last year.

In terms of the services component, BBVA Research highlighted that the segments linked to tourism recovered the level observed until June. Restaurant consumption grew 3.9 percent monthly, after a lower dynamism observed in July, while spending in hotels grew 2.6 percent in August compared to the seventh month in the same period.

“Even considering the August data, the average interannual growth rate of both segments, for the first eight months of the year, remains below that recorded in the same period of the previous year,” since consumption in restaurants observed an average variation of 11.0 percent annually, while spending in hotels showed a contraction of 4.6 percent in the same period.

By type of establishment, the measurement indicates that in August spending in online stores grew 0.5 percent monthly, while purchases in physical stores showed a monthly variation of 2.1 percent during the same period.

However, he noted that online store consumption showed an annual rate variation of 23.8 percent in the first eight months of the year, 15.4 percentage points above the figure recorded in the same period in 2023.

Consumption in physical stores grew 8.3 percent in January-August compared to the same period last year, a figure that was 3.8 percentage points higher than that observed in the same period last year.