MexECON Blog

February Unemployment Falls to 4.8 Percent

Mexico's February unemployment rate fell sharply to a seasonally-adjusted 4.8%, after a revised 5.2% in January.  For comparison, the average unemployment rate in the fourth quarter of last year was 5.0%.  The figure for February was back down to the 4.8% average in the third quarter, which included a three-year low of 4.7% in September.  The report was released today by INEGI, the official statistics agency.

Comment:  The plunge in Mexican joblessness during February provides hope that the softening in the labor market from October to January was just a temporary problem.  Recent reports suggest much of that softness reflected concern over the year-end inauguration of Mexico's new president and debate over the U.S. "fiscal cliff."  Now that the new administration is in place and the fiscal tightening in the United States has proven more limited than feared, Mexico could see a continued rebound not only in employment, but also in consumer spending, investment, and exports.  My main concern is that the weakness in some sectors of the economy is not so easily explained by the domestic political transition or U.S. fiscal policy.  For example, Mexico's mining industry was essentially flat in the first half of 2012, and construction activity fell throughout the second half of the year.  That suggests Mexico could also be facing deeper, more intractable challenges.  In other words, the country is not necessarily out of the woods yet.  Incoming data over the next month or two will be important to help clarify the situation.

Patrick Fearon, CFA
Vice President, Fund Management

                                          Mexico's Unemployment Rate
                                            Seasonally Adjusted, Percent
                                                      Source:  INEGI
Unemployment 1302

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