Mexico's October unemployment rate dropped sharply to a
seasonally-adjusted 4.8%, down from a revised 5.2% in September and
5.3% in August. Joblessness in Mexico is now at its lowest
rate in almost three years. The report today was released by
INEGI, the official statistics agency.
Comment: To date, Mexico's job
market has mirrored the trends in the United States and most other
big developed countries. Unemployment has fallen from the
extreme levels reached in the midst of the global recession, but
the improvements have come at a glacial pace. In fact, when
Mexico's September unemployment report was released last month,
this blog opined that further substantial declines in joblessness
were unlikely. It is still too early to know for sure, but
today's surprisingly good report may be a sign that Mexico's labor
market has found some unexpected traction. It is notable that
the drop in Mexican unemployment came just as weekly jobless claims
in the United States fell below the key 400,000 level for several
straight weeks, and as other recent indicators show U.S. economic
growth has actually accelerated modestly for the last two
quarters. This could indicate that the North American economy
as a whole has at least partially "decoupled" from the travails in
Europe and is now on a slow but relatively resilient upswing.
If the financial stresses and slowing economic growth in Europe and
Asia get bad enough, they would still present some serious economic
risks for North America in general and Mexico in particular.
Nevertheless, if those risks are realized, the momentum in the
North American economy may help cushion the blow.
Patrick Fearon, CFA
Vice President, Fund Management
Mexico's Unemployment Rate