Mexico Remittances May 2017

Mexico

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.

Notwithstanding the risk of tough measures against Mexican immigrants in the U.S., analysts continue to expect remittances to increase further this year and to reach USD 28.1 billion in 2017. For 2018, the panel sees remittances rising to USD 29.3 billion.


Author:, Economist

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Mexico Remittances May 2017

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


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