Mexico’s jobless rate seems to have risen slightly in October

Mexican labor market is expected to have peaked, while the jobless rate is likely to have risen in October. In the previous month, the seasonally adjusted series had recorded that the unemployment rate increased 0.07 percentage points and that the labor market progress has stalled in the last three months. Looking at it closely, it implies that the seasonally adjusted jobless rate has stayed nearly flat since April in 2016.

This probably explains part of the negativity seen in the consumer sentiment figures, stated Societe Generale in a research report. The jobless rate is almost 0.5 percentage points higher than the estimated NAIRU and the subdued growth outlook signifies that it has possibly bottomed in this cycle.

“We expect seasonally adjusted unemployment rate to have risen a tick to 3.97 percent in October while the non-adjusted rate was likely flat at 4.15 percent”, added Societe Generale.

Given that the Mexican economy is expected to lose momentum gradually, the labor market is likely to ease, while the jobless rate is expected to stabilize if not decline. A sharp collapse in manufacturing growth or trade activities might result in an immediate decline in the labor market. But it is more likely that the labor market would decelerate at a gradual rate as it appears to be the case with the economy, according to Societe Generale.