| | |  Business News 
Mexico July Retail Sales Slip 0.01 Pct From June
 Jason Lange - Reuters
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September 21, 2010
Mexico City - Mexican retail sales fell slightly in July in a setback for Mexico's recovery from recession that could give its central bank more room to leave interest rates low.
Sales fell 0.01 percent in July from June, the national statistics agency said on Tuesday. Retail sales have now fallen in three out of four months through July.
Mexico is limping back from one of the deepest economic contractions seen anywhere in the world last year. A slowdown in the United States is already cooling growth in Mexican factory output.
Most economists have forecast that consumer spending would compensate for some of the slack in industry.
At the same time, sales were up 2.0 percent compared to July 2009, which was slightly higher than forecast.
With unemployment still well above pre-recession levels, many consumers are cutting back.
"I had to explain to my daughter that we couldn't buy the toy she wanted," said Maria Luisa Ortiz, who was browsing in a shopping center on the industrial northside of Mexico City.
An insurance agent whose husband hasn't found work since shutting down his electronics repairs shop, Ortiz said the family also hasn't been able to replace fraying linens. "We're spending less on everything."
While Brazil, Chile and Peru have all raised borrowing costs this year to cool their better-performing economies, Mexico is expected to keep its target for overnight bank lending at an all-time low until at least mid-2011.
Yields for interest rate swaps did not move following the data, suggesting that investors had not altered their bets on the direction of monetary policy.
"We're expecting growth to be modest," said Invex economist Ricardo Aguilar, who thinks the central bank will hold rates low until around the end of 2011.
(Additional reporting by Luis Rojas Mena; Editing by Andrew Hay)
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