In a report last week, Mexico's preliminary February
unemployment rate fell to 5.2%, after adjusting for seasonal
variations. In January, unemployment had risen to 5.5%.
Mexico's jobless rate in February was at its lowest level since
early 2009. However, the rate is still much worse than during
the country's last boom period. Throughout 2005-2008,
Mexico's unemployment rate was consistently between 3.0% and
Comment: Because of its economic
structure, Mexico's unemployment rate often looks surprisingly
low. For example, relatively weak unemployment benefits and a
large and flexible informal economy help to reduce the number of
Mexicans reporting that they are unemployed. The more
important issue is the trend in the country's jobless rate.
On that score, Mexico has had declining unemployment since
mid-2009, reflecting the strong economic rebound that has take
place as exports to the United States turn up again. The
improvement in the labor market is probably one reason why recent
figures on consumer demand have looked better than
anticipated. The fall in unemployment could help to ensure
that the current economic recovery in Mexico continues.
Patrick Fearon, CFA
Vice President, Fund Management
In Percent, Seasonally Adjusted