MexECON Blog

April Unemployment Rises to 5.5 Percent

Mexico's preliminary April unemployment rate rose to a seasonally-adjusted 5.5%, up from 5.0% in March.  The unemployment rate is now at its highest level since January (see chart).  Nevertheless, the rise in April was only the second increase since last September.  Mexican unemployment is still below its peak for this cycle, though it is still much higher than during the country's last boom period.  Throughout 2005-2008, Mexico's unemployment rate was consistently between 3.0% and 4.0%.

Comment:  Mexico's unemployment rate often looks surprisingly low.  Relatively weak unemployment benefits and a large and flexible informal economy help reduce the number of Mexicans reporting they are unemployed.  In addition, the possibility of crossing the border into the United States probably keeps reported unemployment lower than it otherwise would be.  Because of this, the more important issue is the trend in the country's jobless rate.  On that score, Mexico has generally enjoyed a falling unemployment rate since mid-2009, as rising demand in the United States boosted Mexican exports and fed a rebound in the Mexican industrial sector.  If the labor market continues to strengthen, consumer demand could rebound as well, and the Mexican economic recovery could become more resilient.  Nevertheless, the rebound in unemployment in April and the recent turmoil in the global financial markets should serve as a reminder that there are still risks to the Mexican economy.

Patrick Fearon, CFA
Vice President, Fund Management

                                          Mexican Unemployment Rate
                                                 Seasonally Adjusted
                                                      Source:  INEGI
Unemployment 1004

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