Unemployment Should Slow Wage Growth

Unemployment in Mexico rose by 17% m-o-m in July, up to 4.2, the highest unemployment rate since August 2004. We see this upturn as yet another indictor of Mexico's deteriorating economic outlook in H208, and with further increases on the cards, this could well lead to a downgrade in our short-term economic risk rating, currently standing at 81.9. However, we also believe this increase in unemployment, combined with the downturn in global commodity prices, will ease upward pressure on wages, which also saw an increase in July, up 6% m-o-m.

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