MexECON Blog

May Unemployment Unchanged at 5.0 Percent

Mexico's May unemployment rate was unchanged at a seasonally-adjusted 5.0%.  Joblessness in Mexico remains modestly below its two-year average of 5.2%, but it is still above its cycle low of 4.8% last October.  The report was released today by INEGI, the official statistics agency.

Comment:  Since reaching its cycle peak of 6.0% in September 2009, unemployment in Mexico has been falling at a glacial pace.  Since late 2011, it has flattened out, and joblessness now appears stuck at about 5.0%.  Mexico's current above-average economic growth could prompt renewed hiring and lower unemployment again in the coming months, especially since exports and industrial production have recently reaccelerated.  However, a number of cyclical and structural factors could limit any improvement or even lead to a rebound in joblessness.  The most obvious cyclical risk is that contagion from the European debt crisis could spark a new global recession.  The U.S. economic recovery could also peter out, cutting the demand for Mexican exports.  A key structural risk, which has not been widely acknowledged, is that U.S. economic problems and tougher immigration policies have capped Mexican emigration to the United States.  That means the United States is no longer an escape valve siphoning off Mexico's excess workers.  As those workers stay put in Mexico, the country's unemployment rate may be pushed higher than it otherwise would be.

Patrick Fearon, CFA
Vice President, Fund Management

                                       Mexico's Unemployment Rate
                                        Seasonally Adjusted, Percent
                                                    Source:  INEGI
Unemployment 1205

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