MexECON Blog

May Unemployment Rises to 5.7 Percent

Mexico's preliminary May unemployment rate rose to a seasonally-adjusted 5.7%, after 5.5% in April and a revised 5.1% in March, according to a report today from the national statistics agency INEGI.  With joblessness up strongly for two months in a row, the nation's unemployment rate has now reached its highest level since September 2009.  Indeed, the rate is almost back to its cycle peak of 5.9% exactly one year ago.  During Mexico's last economic boom in 2005 through 2008, the unemployment rate was consistently between 3.0% and 4.0%.

Comment:  The rebound in Mexico's unemployment rate is worrisome, though it is still too early to know if it will drag the economy back into recession.  Mexico's current economic rebound is driven mostly by increasing exports to the United States.  Stronger sales north of the border have given a boost to industrial production, inventory rebuilding, and, until recently, hiring.  If U.S. demand keeps rising, Mexican economic activity could keep advancing, and unemployment could start declining again.  Indeed, this week's revised report on Mexico's first-quarter gross domestic product (GDP) indicated that private-sector investment increased at the beginning of the year for the first time since mid-2008.  If Mexican firms keep purchasing new property, plant, and equipment, they will eventually start hiring again in order to staff their new facilities.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexico's Unemployment Rate
                                          Seasonally Adjusted, Percent
                                                      Source:  INEGI
Unemployment 1005

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