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Cesáreo Gámez: Confidence Rebound

Cesáreo GámezCesáreo Gámez Source: Courtesy

The confidence indicatorsBoth consumer and business continue to show an upward trend. The Consumer Confidence Indicator (ICC) has accumulated eight consecutive months with an increasing trend.

In May 2020, the ICC showed its minimum value, with 31.4 points. Since then, the ICC has been growing, reaching 38.4 points in January 2021.

A similar trend is observed in Indicators of Business Confidence (ICE), both in the manufacturing industry and in the construction and commercial sector.

THE ICE of the manufacturing industry it has increased by 7.5 points between May and January, while those of construction and commerce have grown by 7.8 and 7.2 points, respectively in the same period.

The increase in the confidence of economic agents in Mexico may be due to the incipient recovery that has been observed in some sectors of the economy.

Another possible cause would be the appearance of vaccine to combat Covid, although in Mexico the application of it has faced logistical and organizational problems, which is no longer a novelty in our country.

In any case, if we compare the confidence indicators against the same month last year, we continue to observe negative rates.

The Consumer Confidence Indicator in January 2021 is 4.9 points below the level it had in January 2020, while the ICEs of the manufacturing industry, construction and commerce are located 4.0, 3.4 and 5.2 points below those they had in the first month of last year.

As is customary, the sub-index of the ICE that shows a more negative behavior was the one referring to the perception that the current one is an appropriate time to invest in our country, which registered falls of 12.1, 2.6 and 10.3 in the manufacturing industry, construction and the commercial sector, respectively.

Traditionally, it has been observed that variations in the confidence of economic agents are reflected in the behavior of hard data, so this rebound should translate into improvements in the indicators of consumption, manufacturing, construction and trade in the short term. term, let’s hope so.

Widespread decline in the industry

Industrial activity registered a contraction of 10.0 percent in 2020, according to information provided by INEGI.

No sector of the industry escaped the fall, all registered negative rates during the past year. The contraction in the construction industry stands out, which fell by 17.2 percent in 2020, especially the construction of public works, which registered a negative rate of 25.3 percentage points.

As for the manufacturing industry, as a whole there was a contraction of 10 percentage points. However, the manufacture of transport equipment It fell by 20.9 percent, while the manufacture of machinery and equipment and metal producer registered negative rates of 16.8 and 10.2 percent, respectively.

Mining posted a 1.1 percent drop last year, and electricity generation and water supply contracted by 5.3 percentage points.

The author is an economist from the UANL, with a doctorate from the Graduate School of Business Administration and Management (EGADE) of ITESM. He is a professor at the UANL Faculty of Economics and a member of the SNI-Conacyt.

This is an opinion column. The expressions used here are the sole responsibility of the person signing them and do not necessarily reflect the editorial position of El Financiero.