MexECON Blog

January Unemployment Steady at 4.4 Percent

Mexico's January unemployment rate came in at a seasonally-adjusted 4.4%, unchanged from December but lower than the 4.6% rate in November and the 4.7% rate in both October and September.  At its most recent peak, unemployment in Mexico stood at 5.1% last July.  With the recent declines, Mexican unemployment is now well below its six-month moving average.  It currently stands at its lowest level since late 2008.

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

Comment:  Taken to two decimal places, Mexico's unemployment rate actually increased slightly in December.  Nevertheless, joblessness remains significantly lower than it was in mid-2014.  The labor market has clearly strengthened over the last several months.  That's to be expected, given that Mexican exports have generally been rising, manufacturing activity has strengthened, and construction has been on the rebound.  There is some indication that consumers are still somewhat disconcerted by the sales tax increases at the beginning of 2014, and recent data suggests the stronger labor market has not yet boosted wage rates.  There is also a risk that continued low oil prices will eventually lead to government fiscal problems, and potential interest rate hikes in the United States could spark a destabilizing outflow of capital.  All the same, I remain optimistic that increased hiring will support continued improvement in consumer sentiment and consumption spending, which should help support Mexican economic growth in the coming quarters.

Patrick Fearon, CFA
Vice President, Fund Management

Unemployment 1501

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