| | |  Business News | December 2008 
Mexico May Report Remittances Declined in October
 Jens Erik Gould - Bloomberg
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Mexico’s central bank may report today that money transfers from workers abroad fell in October as the plunging U.S. economy puts Mexican laborers out of work.
Remittances, the third-biggest source of dollar flows into Mexico, will fall 10 percent in the fourth quarter, said Ricardo Aguilar, an economist at Invex Casa de Bolsa SA in Mexico City. Invex doesn’t estimate the data on a monthly basis. Remittances fell 6.5 percent to $5.93 billion in the third quarter.
The U.S. unemployment rate was the highest since 1994 last month. While the impact of falling transfers on Mexico’s economy will be marginal because remittances are equal to just 2.7 percent of gross domestic product, the trend will slow consumption in rural areas dependent on the money, Aguilar said.
“We expect a strong fall in construction activity and jobs in the U.S.,” Aguilar said in a telephone interview. “The regional impact can be significant.”
The U.S. jobless rate rose to 6.5 percent in October as companies slashed payrolls, setting the stage for the steepest economic decline in decades. Mexican immigrants in the U.S. may have been particularly hard hit because 38 percent of them work in construction and manufacturing, according to the central bank.
U.S. construction spending fell 0.3 percent in September. A three-year housing recession in the U.S. has prompted builders to scale back projects as declining home values weigh on demand.
The world economic slump, and particularly the slowdown in the U.S., is hurting Mexico’s economy, the central bank has said. Merrill Lynch & Co. and Credit Suisse Group AG last week reduced their estimates for Mexico’s 2009 growth to 0.4 percent and 0.6 percent.
Stocks, Bonds, Peso
Mexico’s benchmark Bolsa index rose 13 percent last week to 20,534.72, the first weekly advance in November. Cemex SAB, North America’s largest cement producer, surged 66 percent as concern eased about the company’s ability to refinance debt. The weekly gain for Cemex was the biggest since at least 1994.
Yields on Mexico’s 10 percent bond due December 2024 fell 58 basis points last week, or 0.58 percentage point, to 9.16 percent, according to Banco Santander SA. The bond’s price rose 4.97 centavos to 107.05 centavos per peso.
The peso strengthened 1.9 percent last week to 13.4647 per U.S. dollar. November marked the fourth consecutive monthly decline for the currency, which has fallen 27 percent from a six- year high reached Aug. 4.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9(at)bloomberg.net |
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