UPDATE 2-Mexico consumer confidence climbs in August

* August consumer confidence at 88.7 from 87.4

* Analysts had expected a drop to 87.0

* Consumers see improved economy; worry about future
(Recasts, adds bullet points, byline)

By Patrick Rucker

MEXICO CITY, Sept 3 (BestGrowthStock) – The economic outlook of
Mexicans unexpectedly brightened in August but concerns remain
as the country struggles out of a deep recession, a consumer
survey showed on Friday.

Mexico’s consumer confidence index (MXCONC=ECI: ) rose in
August to 88.7 from 87.4 in July, according to national
statistics data. Analysts expected the index to fall to 87,
according to a Reuters poll.

Seasonally adjusted consumer confidence (MXCONF=ECI: ) also
rose, to 87.1 in August from 86.8 in July.

The fate of the Mexican economy, the second largest in
Latin America, is closely tied to that of the United States,
which absorbs 80 percent of Mexican exports. While recent U.S.
economic data has helped assuage fears of a double-dip
recession, all signs point to a rocky recovery ahead.

Three of five measures of Mexican consumers’ confidence
were up in the August survey, including a gauge of whether
consumers were inclined to make a large household purchase like
furniture or a television, which jumped to 70.1 from 63.2 in
July.

After shrinking 6.5 percent in 2009, its worst contraction
since 1932, Mexico’s economy has improved from a year ago and
growth is expected to come in between 4 and 5 percent in 2010.

But Friday’s report showed Mexican consumers remain anxious
about the nation’s economic health over the next twelve months.
By any measure, consumers are much more anxious than they were
before the recent financial crisis.

“The consumer confidence index still has significant room
to improve as it is still about 26 percent below the average
level seen during 2006 and 23 percent below the average level
seen during 2007,” Goldman Sachs said in a research note.

Analysts in a central bank poll recently raised their
expectations for 2010 growth to 4.6 percent assuming consumers
will increase spending later this year; they also pared their
forecast for inflation to 4.43 percent.

While Brazil, Chile and Peru have hiked interest rates this
year to cool their economies, Mexico is not expected to tighten
the money supply until around the second quarter of next year.
(Editing by Missy Ryan and Andrew Hay)

UPDATE 2-Mexico consumer confidence climbs in August