Mexico Remittances June 2016


Remittance inflows moderate in June

The increase in remittances moderated toward the end of Q2. Remittances totaled USD 2.3 billion in June, which marked a 6.9% increase over the same month last year. The print was in line with market expectations and marked a third consecutive month of increase, albeit at a slower rate than the 13.0% increase registered in May. With June’s increase, the 12-month trailing sum of remittances totaled USD 25.8 billion, which represented a solid 7.3% expansion compared to the same period last year. This followed the 7.2% expansion in the 12 months up to May.

The solid growth rate in remittance inflows in Q2 is mainly the result of the Mexican peso’s persistent weakness. According to analysts at JPMorgan, “workers tend to take advantage of a depreciated currency to boost the peso value of their dollar remittances.” In addition to a weak peso, remittances continue to be supported by a healthy U.S. labor market. U.S. payrolls in the construction sector—a proxy of hiring dynamics in the labor market with a high proportion of Mexican workers—continued to increase in June, although the increase was the slowest since September 2015.

Analysts who participated in this month’s LatinFocus Consensus Forecast panel continue to take these developments into account and expect remittances to reach USD 26.1 billion in 2016. For 2017, the panel sees remittances rising to USD 26.8 billion.

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Mexico Remittances Chart

Mexico Remittances June 2016 4

Note: Year-on-year variation of remittances from Mexican workers abroad and U.S. payrolls in the construction sector.
Source: Mexico Central Bank (Banxico) and U.S. Bureau of Labor.

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