Mexico's August unemployment rate fell to a seasonally-adjusted
5.2%, according to a report on Thursday from the national
statistics agency INEGI. That was down from revised readings
of 5.3% in July, 5.4% in June, and 5.5% 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: Mexico's unemployment
rate reached a recession high in September 2009, when it soared to
a revised 6.0%. It then fell gradually until March 2010
before rebounding for several months. Now, joblessness in
Mexico is clearly on a downtrend again. As exports have
soared, industrial activity has picked up, and hiring has
increased. Improved labor demand and increased consumer
confidence have even spurred a modest acceleration in consumer
spending. This week's revised report on Mexico's
second-quarter economic growth showed that consumption spending
rose in real terms for a second straight quarter, posting its best
rate of increase in three years. Nevertheless, Mexico's
economic rebound is still uncomfortably dependent on rising exports
- particularly exports of trucks, autos, and auto parts to the
United States. Unemployment will probably have to fall
further in order to allow consumer spending to grow even faster and
give the economic upswing a second major leg to stand on.
Even more important, corporate investment is still essentially
frozen in Mexico, and it will have to pick up in order to make the
current economic rebound truly sustainable.
Patrick Fearon, CFA
Vice President, Fund Management
Mexican Unemployment Rate
Seasonally Adjusted, Percent