Mexico unlikely to get to full employment in 2015, though unemployment falling

Mexico's manufacturing employment index actually shows employment growth has continued at a robust pace throughout this year, due to an improvement in real exports in the manufacturing segment. 

Although Mexico's unemployment rate rose from 4.41% to 4.72% in July, the seasonally adjusted variant shows it actually continued to fall to 4.31%. Year-on-year, both these variants are down by over 0.7% pts, reflecting continued improvement in the labour market, albeit that improvement nearly stalled in H1 this year.

"With the economy expected to grow to its potential in H2, the labour market improvement is expected to continue through this year and next. For August, a mild improvement at 4.64% (4.25% for the seasonally adjusted series) is likely", says Societe Generale.

The unemployment statistics and the pace of growth, however, suggest that the economy will still take several months to absorb the slack in the labour market - a precondition before wages start rising significantly to add to inflationary pressure.

"However, the economy won't get to the full employment level (roughly 3.5% of unemployment rate) this year", added Societe Generale.