Gradual improvement in Mexico labour market continues

Mexico's unemployment rate decreased to 4.2% in seasonally adjusted terms in March as the participation rate declined to 59.8% from 60.1% in the previous month. In annual comparison, the unemployment rate decreased to 3.9% from 4.8% in March 2014.

The positive report supports our view that the labor market will gradually improve to reach close to 4.0% unemployment rate by the end of the year; however, there is still no evidence of wage pressures, as the latest wage negotiations (Jan) yielded an annual wage increase of 4.4%, in line with rate of the past four years.

"We maintain our view that the economy decelerated in Q1 15 and that this report should not have significant implications regarding the next monetary policy decision on April 30 at which we believe the board will maintain the reference rate at 3.00% with a slight dovish tone." said Barclays Capital