MexECON Blog

July Unemployment Falls to 5.4 Percent

According to INEGI, the national statistics agency, Mexico's unemployment rate fell to a seasonally-adjusted 5.4% in July, down from 5.5% in June and 5.6% in May.  Unemployment in Mexico is now at its lowest level since March.  Nevertheless, joblessness remains relatively high.  During Mexico's last economic boom from 2005 to 2008, the unemployment rate was consistently between 3.0% and 4.0%.

Comment:  Because of the strong economic recovery that began in Mexico in early 2009, the country's unemployment rate eased from a cycle high of 5.9% last September to just 5.1% in March.  However, unemployment then showed a worrisome rebound for a couple of months as economic activity began to moderate.  If joblessness in Mexico is now back on a downtrend, it could help make the country's recovery more resilient.  That is important because the recovery to date has been fueled predominantly by rapidly rising exports to the United States.  Stronger sales abroad have boosted Mexican industrial activity and spurred additional hiring.  Unfortunately, recent reports suggest U.S. inventory rebuilding could be coming to an end, while corporate and consumer demand north of the border have little prospect of accelerating further in the near future.  Any slowdown in Mexican exports and industrial activity could be mitigated if the job market strengthens further and the country's consumers become more willing to spend.

Patrick Fearon, CFA
Vice President, Fund Management

                               Mexican Unemployment Rate
                               Seasonally Adjusted, Percent
                                           Source:  INEGI
Unemployment 1007

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