Mexico: Growth in remittances remains solid in October
December 1, 2016
Mexican workers abroad continue to take advantage of a weak peso to send remittances home. In October, transactions totaled USD 2.2 billion, which was in line with market expectations and represented a healthy 7.1% year-on-year increase. October’s expansion followed the hefty 15.7% increase in September and brought the 12-month trailing sum of remittances to USD 26.4 billion, which was an all-time high and marked a 6.7% increase from the same period last year.
The ongoing improvement in the U.S. labor market continues to support the upward trend in remittances. The U.S. labor market, particularly in the construction sector, which is a proxy of hiring dynamics in the labor market with a high proportion of Mexican workers, continued to show healthy growth in October. Also, Mexican workers abroad continue to take advantage of the weakness of the peso. Remittances thus currently look to be being boosted artificially by the peso’s depreciation and workers’ opportunistic behavior.
Author: Ricardo Aceves, Senior Economist