MexECON Blog

November Unemployment Rises to 5.1 Percent

Mexico's November unemployment rate rose to a seasonally-adjusted 5.1%, after revised readings of 4.9% in October and 4.7% in September.  Joblessness in Mexico is now at its highest level since March, and it is above its 4.9% average over the preceding twelve months.  The report was released today by INEGI, the official statistics agency.

Comment:  The jump in unemployment during November is worrisome, as it suggests the recent softening in Mexico's international trade and industrial activity may now be spreading to the labor market.  In seasonally-adjusted terms, Mexican exports have fallen in six of the last eight months, though they are still higher than they were one year ago.  Industrial production has started to decline, and fixed investment has flattened out.  Increased joblessness would be the natural result of these trends.  Of course, the recent pullbacks in trade, industry, and hiring could partly reflect temporary worries about the U.S. "fiscal cliff" of sharp tax hikes and government spending cuts scheduled for year's end.  If politicians reach a deal to avert the cliff, the United States may face only modest fiscal tightening in 2013, and U.S. demand for goods and services from south of the border could strengthen again.  On the other hand, Mexico's current economic rebound is getting long in the tooth, and growth should naturally moderate as the expansion matures.  Moreover, U.S. economic activity is unlikely to accelerate dramatically even if the fiscal cliff is avoided, and there is still the threat of renewed global contagion if Europe's debt crisis worsens again.  Faced with all these headwinds, Mexican unemployment could continue to rise, consumer spending could retreat, and the economy could lose its last major source of growth.

Patrick Fearon, CFA
Vice President, Fund Management

                                           Mexico's Unemployment Rate
                                             Seasonally Adjusted, Percent
                                                       Source:  INEGI
Unemployment 1211

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