Mexican consumers confident in 3 years

MEXICO CITY: Mexican consumer confidence jumped to its highest in more than three years in July in a positive sign for the country's underperforming economy.

Mexico's consumer confidence index rose to 94.2 adjusted for seasonal factors, the national statistics agency said on Thursday.

Analysts polled by Reuters had expected a reading of 92.2 in July, up from June's initially reported 91.9. June's reading was revised to 92.4.

The rise in July to the highest since May 2008 was driven by an improvement in Mexicans' perception of purchasing power for household appliances.

Mexico is still limping back from a deep recession. Its economy is closely linked to that of the United States, where recent weak economic data have frustrated hopes for a rebound in the second half of the year. For more see

But analysts said the jump in consumer confidence boded well for Mexico's ability to withstand a weaker US outlook.

"It was clearly a positive surprise and confirms the upward trend of the last few months," Morgan Stanley economist Luis Arcentales said.

"The pieces are coming together for consumers.

Inflation is low, there are wage gains modest but positive and credit is finally coming back."

Mexico, Latin America's second-largest economy, has been alone among its peers in not raising interest rates since the global recovery took hold.

Implied bets in markets for interest rate futures and interest rate swaps show investors are steadily pushing back expectations for rate hikes from the current 4.5 percent level, with no move expected until July 2012 at the earliest.

The unadjusted consumer confidence index was 95.5 in July, higher than expectations of 92.4.

Copyright Reuters, 2011