The Day at a Glance | June 2 2023

*Created jobs in the US once again surprised to the upside during May. 

*Remittances exceeded $5 billion in April, although they logged moderation. 

*Both the manufacturing and non-manufacturing indicators from the IMEF deteriorated in May compared to the previous month. The readings set at 49.8 (-0.1) and 51.1 (-0.9) points, respectively. 

*Mexico´s manufacturing PMI decreased by 0.6 points to 50.5 in May, remaining in expansionary territory for the fourth consecutive month but reached its lowest level since January. It´s noteworthy that the cost component fell to a 20 month low. 

*Mexico´s unemployment rate for April slightly exceeded the expected 2.75% of the economically active population, with a rate of 2.82% compared to March´s 2.39%. Nevertheless, the most recent figure is the fifth lowest since 2005. 

*INEGI published figures from its cyclical indicators system. The indicator for March set at 101.0 points, 0.07 points higher than February´s figure, while the leading indicator for April reached 100.1 points after advancing 0.07 points. 

*The manufacturing indicator from the Institute for Supply Management (ISM) fell to 46.9 points in May, marginally lower than the consensus forecast of 47.0. It logged mixed results as the new orders component declined to 42.6 points (-3.1), the employment component advanced to 51.4 points (+1.2), and the prices paid component recording a significant decrease (-9.0 to 44.2). 

Economic environment

The US labor market continues to expand at a robust pace. In May, 339,000 new jobs were created in the US, which is the second highest figure this year, surpassed only by the 472,000 figure reported in January. Furthermore, this number significantly exceeded the market´s 195,000 estimate, marking the fourteenth consecutive month in which jobs created surpassed market expectations. With this, in the first half of 2023, 1.57 million jobs have been created in the US. Additionally, and marginally tempering the aforementioned figures, the unemployment rate increased more than expected to 3.7% (vs 3.5%e.) from April´s 3.4%. Moreover, hourly wages moderated their pace of growth to 0.3% m/m from the previous 0.4% m/m, resulting in a 4.3% annual reading, the same as in March and the lowest level since June 2021. Finally, the labor force participation rate remained at 62.6% for the third consecutive month. While job creation figures support the idea of further increases, comments made this week by FED official Philip Jefferson about “skipping” the June decision and waiting for further data assessment have shifted market expectations for a rate hike in July. 

Family remittances continued to show a solid monthly flow, although with a moderation in their growth rate during April. The transfers from Mexicans abroad reached a total of $5,003.3 million in April, which, although it´s the ninth monthly figure to surpass the $5,000 million mark, it´s the fourth lowest in the last 12 months. Similarly, its nominal annual variation of 6.28% indicates a noticeable slowdown from the 10.52% y/y logged in March. This growth came from an 8.61% increase in the number of operations compared to the same month last year, although the average amount per transfer decreased for the first time in five months by -2.28% y/y, with a $381.7 figure. Furthermore, due to the exchange rate effect, total remittances when accounted in pesos fell to 90,487 million from the 94,669 million pesos a year ago (-4.42% y/y), causing the average transfer to decrease to 6,904 pesos (-12.15 y/y), nearly a thousand pesos less than the 7,859 pesos received in April 2022.