MexECON Blog

June Unemployment Surges to 5.7 Percent

Mexico's June unemployment rate surged to a seasonally-adjusted 5.7%, and the May rate was revised upward to 5.6%.  According to the report, from the official statistics agency INEGI, joblessness was unrevised at 5.2% in April and just 5.0% in March. 

Comment:  The surge in Mexican unemployment is a major disappointment.  Joblessness in Mexico is now perilously close to its cycle peak of 5.9% back in September 2009.  Some of the recent job losses could be tied to supply chain disruptions in the auto sector resulting from the March earthquake in Japan.  Recent reports out of Japan suggest those supply disruptions are dissipating quickly, so employment in Mexico's auto sector could soon begin to heal.  Nevertheless, most of the deterioration in Mexico's job market probably reflects the more general problem of a slower economic recovery in the developed countries.  Although Mexican industrial production and fixed investment staged an encouraging rebound lately, there is some risk that the global economic soft spot could continue to weigh on exports and discourage industrial activity.  In any case, the surge in unemployment is likely to continue weighing on Mexico's consumer demand in the months ahead.

Patrick Fearon, CFA
Vice President, Fund Management

                                Mexico's Unemployment Rate
                                 Seasonally Adjusted, Percent
                                              Source:  INEGI
Unemployment 1106

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