Mexico: Remittances remain strong in May
July 1, 2017
Remittances totaled USD 2.6 billion in May, a 4.5% expansion from the same month last year and the second best reading on record. The result followed a 6.2% increase in April and was in line with market expectations. On the back of a robust U.S. labor market and the weakness of the peso earlier this year, the 12-month trailing sum of remittances totaled USD 27.7 billion, a 7.5% increase compared to the same period last year and the highest figure to date. The increase followed an 8.3% expansion in the 12 months up to May.
Remittance inflows, a key source of income in Mexico, have been one of the country’s brightest spots so far this year. On an encouraging note, growth in remittances was once again driven by both increases in the number of transactions and the average remitted amount. In recent years, remittance inflows had been solely driven by increases in the number of transactions, which was in line with an improving U.S. labor market but depressed wage growth. Hence, May’s increase in the average remitted amount, the fourth consecutive month it does so, points to rising compensation for Mexican workers in the U.S., which risks a positive surprise to consumer spending this year in Mexico.
Author: David Ampudia, Economist