Mexico’s unemployment rate was 2.4% in March. This was below the expected rate of 2.5%.
The release compares the reported figure with the market forecast. No other figures were provided in the update.
The March jobless rate dropping to 2.4% points to a tighter labor market than we anticipated. This reinforces other signs of economic strength, like the recent manufacturing PMI which showed solid expansion at 52.8. A resilient economy suggests consumer spending will remain robust in the coming months.
This strong employment data will likely force Banxico to reconsider the timing of any potential interest rate cuts this year. With core inflation still sticky around 4.4%, well above the central bank’s target, a hawkish stance is now more probable. We see this as reducing the odds of a rate cut before the third quarter.
For currency traders, this outlook should be supportive of the Mexican Peso. The high interest rate differential that fueled the successful carry trade we saw through much of 2025 looks set to continue. We would anticipate the Peso to test stronger levels against the dollar in the coming weeks.
In the rates market, we should expect a repricing of the TIIE swap curve. Bets on imminent rate cuts will likely be unwound, causing the front end of the curve to sell off. This presents an opportunity to position for a “higher for longer” interest rate scenario from Banxico.
The impact on the IPC stock index is more complex. While a strong economy is fundamentally good for corporate earnings, the prospect of sustained high borrowing costs could act as a headwind. We might see some caution in interest-rate-sensitive sectors in the near term.
