Mexico’s jobless rate seems to have dropped further in November

Tightening of Mexico’s labor market amidst slowdown of growth is surprising. The sharp fall in the jobless rate in October was surprising given the weakening of growth data and the advance releases on consumer confidence that has deteriorated heavily. The Mexican labor market is yet to indicate concrete signals of weakening in spite of weaker trade and investment activities.

At the current pace of hiring in the manufacturing sector, the jobless rate is expected to have dropped further to 3.49 percent in November, stated Societe Generale in a research report. In spite of these near-term estimates, there is slight concern regarding the growth and labor market outlook. With the Mexican economy expected to slowdown, the labor market is likely to ease and the jobless rate is expected to stabilise if not deteriorate, added Societe Generale.

A sharp collapse in manufacturing growth or trade activities might result in an immediate fall in the labor market. But there is possibility that the labor market would deteriorate at a gradual rate as seems to be the case with the economy.