MexECON Blog

August Unemployment Rises to 5.4 Percent

Mexico's August unemployment rate rose to a seasonally-adjusted 5.4%, according to a report today from the official statistics agency INEGI.  The rate of joblessness in August was slightly higher than the 5.3% registered in July, but it was still lower than the 5.8% reading in June and the cycle peak of 6.0% back in September 2009. 

Comment:  Mexican unemployment has retreated from its surge in early summer, but it remains significantly higher than the first quarter's average rate of 5.1%.  In fact, the first-quarter average may well prove to be the low for this cycle.  With most major economies stalling out or on the verge of renewed recession, Mexico is likely to suffer slowing exports, reduced industrial production, muted domestic demand, and softer hiring in the months ahead.  Outright economic contraction and even higher unemployment cannot be ruled out in the coming quarters.  Indeed, the dramatic decline in Mexican stocks and in the peso over the last couple of weeks suggests market participants are becoming increasingly convinced that Mexico will soon enter a rough patch.

Patrick Fearon, CFA
Vice President, Fund Management

                                         Mexico's Unemployment Rate
                                          Seasonally Adjusted, Percent
                                                      Source:  INEGI
Unemployment 1108

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