MexECON Blog

August Unemployment Falls to 5.2 Percent

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
                                          Source:  INEGI
Unemployment 1008

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