Mexico’s jobless rate close to full employment level, further rebound likely difficult

Mexico’s labor market is close to full employment. The nation’s jobless rate dropped in October-November to the lowest levels since 2008, while the rate of hiring in the manufacturing sector continued to indicate growth in the labor market.

The quarterly labor force data implies that both the labor force and employment growth accelerated in 2016 through the third quarter, which seems a bit inconsistent with the moderate growth and falling growth outlook, said Societe Generale in a research report.

“For the month of December we estimate it to have risen to 3.83 percent in seasonally adjusted terms even though it actually fell to 3.34 percent”, added Societe Generale.

The jobless rate is close to the full employment level and given the outlook of the Mexican growth, it is possible that further improvement might be difficult. A sharp decline in the trade activities or manufacturing growth, both of which are depending on the U.S. economy and U.S. trade policies, might result in an immediate deterioration in the labor market, said Societe Generale.