Ending a three-year slump, remittances to Mexico are finally on the upswing, thanks to an improving U.S. job market. Analysts expect that money sent home last year by Mexicans living abroad, most of them residing in the United States, will top $23 billion when Mexico’s central bank releases annual figures this month. Although still below the peak of $26 billion in 2007, that would be a solid 8% increase over 2010.
Money transfer giant Western Union Co., whose revenue sagged during the recession, saw its remittance business strengthen in 2011. The Colorado company reported a 5% increase in revenue from its Mexico business in the third quarter compared with the same period in 2010. Its stock price is up more than 13% over the last three months.
The figures underscore falling unemployment rates in California and nationwide, where sectors such as construction, manufacturing, restaurants and hotels that employ large numbers of Latino immigrants are creating jobs.
The uptick is also good news for Mexico. Remittances are the nation’s second-largest source of foreign exchange, behind petroleum sales. And they’re a lifeline for millions of low-income Mexicans who use the funds for basics such as food, education and housing.
Remittances are also crucial for infrastructure projects in hardscrabble rural areas of Mexico. Most state governments there have a “Three for One” program in which emigres’ contributions are matched by local, state and federal governments to pay for schools, clinics and other public works projects. When remittances plunged, many projects were suspended or delayed.