Mexico: Remittances slow in September on the heels of more moderate growth in U.S. labor market
November 2, 2015
Mexico’s remittances saw another month of growth in September, but transactions’ pace of expansion moderated compared to the previous month. Remittances increased 4.8% year-on-year in September to a total of USD 2.0 billion. The increase came in below the whopping expansions of 11.8% and 12.4% registered in August and September, respectively.
In the third quarter, remittances totaled USD 6.5 billion (Q2: USD 6.4 billion). According to a new breakdown elaborated by Mexico’s Central Bank, the larger chunk of transactions (USD 6.3 billion) came from the U.S., followed by Canada, which sent USD 93 million. Elsewhere in the region, Colombia is the largest Latin American contributor, where remittances recorded USD 9.0 million, followed by Chile with USD 6.0 million. This information provides a clearer picture that most of the cash sent from Mexicans abroad comes from the northern neighbors.
Remittances from Mexicans abroad continue to be supported by the gradual improvement in the U.S. labor market, in particular in the construction sector. U.S payrolls in the construction sector, which is a proxy of hiring dynamics in the labor market with a high proportion of Mexican workers, continued to increase in September, although the pace of expansion is showing signs of deceleration.
The rolling sum of remittances totaled USD 24.7 billion in the 12 months up to September, which represented a 6.9% increase over the same period last year. The increase followed the 7.1% expansion tallied in the 12 months up to August. As there is more evidence that the U.S. labor market is gradually improving, remittances are slowly approaching pre-crisis levels and the peak that occurred in 2007, when they totaled USD 26.1 billion.
Author: Ricardo Aceves, Senior Economist