Flat unemployment rate confirms modest economic activity in Mexico

The unemployment rate in Mexico remained flat at 4.5% sa in February as the participation rate increased slightly, to 60.2%, from 59.7% in January. In annual terms, unemployment decreased to 4.3%, from 4.7% in February 2014.

The report suggests that there has been a consistent modest increase of new entrants to the labor market, driving the unemployment rate up. 

Barclays notes as follows - "There is still a long way for unemployment to reach close to 4.0%, which is our year-end forecast. This might become difficult if the economy grows more slowly than expected in the coming months. In fact, in February, manufacturing exports fell 0.3% m/m sa, a reflection of still-weak external demand.

We confirm the belief that the labor market remains unpressured, supporting subdued inflation prints in the coming months and allowing Banxico to wait for the Fed to start a hiking cycle."