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Mexico's Jobless Rate Probably Rose in July to Near 5-Year High Bloomberg
August 21, 2003
Mexico's jobless rate probably rose to its highest level in almost five years in July as a slump in manufacturing prompted companies such as Embotelladoras Arca SA to pare payrolls, a Bloomberg News survey shows.
The jobless rate climbed to 3.3 percent from 3.2 percent in June and from 2.9 percent in July 2002, according to the median forecast of 10 economists surveyed by Bloomberg. The rate would be the highest since September 1998, the month after Russia's debt default dried up investment in emerging-market countries.
A second monthly increase in the unemployment rate would be the latest sign that Mexico's economy is sputtering as a sluggish expansion in the U.S., the country's largest trade partner, crimps demand for the country's exports. A 4.5 percent drop in manufacturing in Mexico in the second quarter swelled the ranks of unemployed, said Alfredo Thorne, an economist with J.P. Morgan Chase & Co. in Mexico City.
``Excess workers won't be absorbed by the economy until the manufacturing sector starts picking up again,'' Thorne said. ``We haven't seen a rebound in U.S. manufacturing.''
The U.S. buys about 85 percent of Mexican exports, which account for more than a quarter of the country's $600 billion economy. Exports fell 2 percent to $40.7 billion during the second quarter.
The government is slated to release the July jobs report at 2:30 p.m. today in Mexico City.
Embotelladoras Arca, Mexico's second-largest seller of Coca- Cola products, has reduced it workforce by 1,249 this year to 16,297 and plans to fire more, said Carlos Beltran, chief of investor relations.
Million Jobs
The company is shutting smaller plants to improve efficiency and has introduced hand-held computers for taking clients' orders, reducing the need for delivery drivers and warehouse workers.
``The new technology allows us to be more productive,'' Beltran said.
President Vicente Fox has said the economy needs to generate about a million jobs a year to make room for young people entering the workforce. Job creation has been just a fraction of that: Since Fox took office more than two and a half years ago, the number of workers enrolled in the country's mandatory social security system has risen by 84,000 to 15.5 million workers.
Many economists prefer to monitor the number of registered workers as an indicator for employment, Thorne said, because Mexico counts anyone over 12 years of age who has worked at least one hour a week in any job, such as washing cars or selling gum on the streets, as employed.
Delphi, Volkswagen
Delphi Corp., the world's largest auto-parts producer and the largest private employer in Mexico, isn't hiring. Because of weak demand in the U.S. auto industry, it has cut its workforce to about 70,000 from more than 80,000 three years ago.
``The number of employees has been stable for the past year or so and we're not anticipating any major changes in that,'' said Michael Hissam, a Delphi Spokesman in the U.S.-Mexico border city of Juarez. ``It all depends on customer demand.''
Volkswagen AG, Europe's largest carmaker, cut its workweek by a day to avoid firing people, said Thomas Karig, a Volkswagen spokesman in Mexico. The company's plant in the central state of Puebla is working at 60 percent of capacity.
``We needed to reduce production because of slower sales, mainly in the U.S.,'' Karig said.
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