MexECON Blog

October Unemployment Rises to 5.5 Percent

In a report on Thursday, Mexico's October unemployment rate rose to a seasonally-adjusted 5.5%, up from 5.3% in September and 5.2% in August.  According to the report, from the national statistics agency INEGI, joblessness in Mexico has now risen for two straight months and stands at its highest since May.  For comparison, unemployment in Mexico was consistently between 3.0% and 4.0% during the country's last economic boom from 2005 to 2008.

Comment:  Mexico's unemployment rate fell from a cycle peak of 6.0% in September 2009 to just 5.0% in March 2010, but it has since rebounded modestly, and it is unclear whether it will be able to resume its downward trend.  This puts at risk the modest rise in consumer spending that has recently been evident in Mexico, especially since most observers expect Mexican economic growth to slow in the coming quarters in response to weakening demand from the United States.  Weaker exports would likely slow hiring and discourage Mexican consumer spending.  In a word, Mexican consumer demand may not yet be in a self-sustaining uptrend and may therefore be unable to help make up for weakening exports. 

Patrick Fearon, CFA
Vice President, Fund Management

                                 Mexico's Unemployment Rate
                                  Seasonally Adjusted, Percent
                                              Source:  INEGI
Unemployment 1010

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