UPDATE 1-Mexico retail sales fall 1.1 pct in Oct

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MEXICO CITY, Dec 22 (Reuters) - Mexican retail sales MXRSLY=ECI fell for the second straight month in October as consumers bought fewer household appliances and clothes, the national statistics agency said on Monday.

The data shows Mexico's crucial service sector, which makes up about 60 percent of the economy, is slowing sharply. Many economists expect the economy to fall into recession.

Retail sales fell 1.1 percent from a year earlier, well below the expectations of analysts polled by Reuters, data showed.

Mexico's economy is already hurting because the collapse of the U.S. housing market and tighter credit are blunting American consumers' appetites for Mexican factory wares.

About 175,000 people have lost their jobs in Mexican factories through November, according to social security data.

That, an recent turbulence in financial markets, has helped pushed consumer confidence in Mexico to historic lows, leading Mexicans scale back on their shopping.

Wholesale sales, often an indicator of the future performance of retail sales, fell 1.1 percent in the month compared with October 2007. (Reporting by Jason Lange)