Mexico: Remittances surge in January
March 1, 2016
Remittances rebounded substantially at the beginning of year, which more than compensated for a drop seen in the previous month. Remittances totaled USD 1.9 billion in January, which represented a notable 18.8% year-on-year increase (December: -1.2% year-on-year). Transactions overshot the USD 1.7 billion the markets had expected and the expansion was the fastest since December 2014.
Remittances from Mexicans working abroad, especially in the United States, continued to be supported by the improvement in the U.S: labor market. Job creation in the U.S. continues to firm up as seen in the latest labor report for February. Meanwhile, 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 show positive developments in January.
The trend continues to suggest a sustained recovery in remittances. The rolling 12-month sum of remittances totaled USD 25.1 billion in January, which represented a healthy 6.2% increase compared to the same period last year. The increase followed the 4.8% rise registered in the 12 months up to December. Remittances are expected to continue with a healthy pace of expansion this year as there is more evidence that the U.S. labor market strengthens. Moreover, transactions are gradually approaching pre-crisis levels and the peak that occurred in 2007, when they totaled USD 26.1 billion.
Author: Ricardo Aceves, Senior Economist