MexECON Blog

July Unemployment Jumps to 5.2 Percent

Mexico's July unemployment rate jumped to 5.2%, after a revised reading of 4.9% in June.  The rate of joblessness in July was well above its six-month moving average of 5.0%, and it was the highest level since March.

The report was released today by INEGI, the official statistics agency.

Comment:  Unemployment in Mexico jumped to 6.0% near the end of the 2008-2009 recession, but it has been declining ever since.  The problem is that the downtrend has been excruciatingly slow and uneven.  There have been several periods of rebounding unemployment, as in recent months.  With joblessness still significantly higher than before the recession, inflation relatively high, and new sales taxes that took effect in January, it should be no surprise that Mexican consumer confidence has been retreating since early 2013.  Data yesterday suggested an uptick in consumption demand helped boost economic growth in the second quarter, but I believe that could reflect only a short-term rebound as consumers come to terms with the new sales taxes.  The recent rebound in Mexican exports, manufacturing, and construction will probably have a salutary impact on hiring over time, but until that happens, the labor market will remain somewhat soft and the rebound in consumer spending is likely to be limited.

Patrick Fearon, CFA
Vice President, Fund Management

                                            Mexico's Unemployment Rate
                                             Seasonally Adjusted, Percent
                                                       Source:  INEGI
Unemployment 1407

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