By Anthony Harrup
MEXICO CITY -- Unemployment in Mexico fell to its lowest level in nine years in October amid strong private-sector job growth that has supported consumption and helped keep the economy expanding.
Seasonally adjusted unemployment fell to 3.6% of the workforce last month from 3.8% in September and 4.4% a year before, helped in part by fewer people looking for work, the National Statistics Institute said Monday. It was the lowest unemployment rate since December 2007.
Unemployment in the 32 largest cities fell to 4.4% from 5% in September and 5.1% a year earlier.
The decline in unemployment has been slow but steady since the shock of the 2008-2009 crisis, to which the economy hasbeen slow to adjust, said David Kaplan, a senior economist at the Inter-American Development Bank who specializes in labor markets.
"This shouldn't be interpreted as great news," he said, adding that although wages began rising a little more than inflation toward the end of 2014, they are still quite far from pre-crisis levels.
Growth in jobs and wages, along with low inflation and increased consumer lending, have lifted private consumption, which in turn fueled the 2.3% growth in economic output in the first three quarters of the year.
Strength in consumption and the labor market likely gave the Bank of Mexico some comfort about the impact on the economy as it raised interest rates four times this year to confront peso weakness and the currency risk to inflation, Goldman Sachs Latin America economist Alberto Ramos said in a note.
The jobs numbers and an apparent stabilization of the balance of payments suggest the economy may not be performing as far below capacity as generally perceived, although an expected economic slowdown and uncertainty following the election of U.S. President-elect Donald Trump could begin to undermine a so-far resilient labor market, he added.
The Bank of Mexico last week lowered its economic growth forecast for 2017 by half a percentage point to 1.5%-2.5%.
Labor Ministry data show the number of formal private sector jobs increased by 171,552 in October to 18.8 million, up 4.1% from a year before. The unemployment rate is based on a broader survey which takes into account public-sector workers, the self-employed and those employed in informal conditions.
Informal employment rose to 57.4% of those in work from 56.9% in September, and underemployment -- people who have work but need more -- rose to 7.7% from 6.8%.
The peso's fall to new lows against the U.S. dollar has also begun pushing up inflation as prices ofimported goods rise. Annual inflation, which had been below the central bank's 3% target for 17 consecutive months through September, accelerated to 3.3% in mid-November.
Write to Anthony Harrup at email@example.com
(END) Dow Jones Newswires
November 28, 2016 18:16 ET (23:16 GMT)
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