Mexico likely to reach full employment by H2 2016

With respect to the unemployment rate observed in July, Mexico's August unemployment rate remained flat. An unexpected increase in the participation rate of almost 80bp mainly drove this in seasonally adjusted data reaching 60.1% in August.

Underemployment also stayed constant at 8.2% in sa terms, while the labor informality rate slightly increased. The main message of this report is that employment continues to grow, but the new entrants are maintaining a relatively important level of slack in the labor market.

Contractual wages increased 4.6% y/y in August, while under low inflation, real wages are still recovering this year giving support to the domestic demand. 

"So far, the unemployment rate has improved 50bp in a year, so at this pace, the economy could be reaching "full employment" (3.5%) by the end of the next year, if the economy continues growing at least close to 2.4% y/y", says Barclays.