Valerie Rota and William Freebairn, Bloomberg Press, March 5, 2008
Mexicans working abroad, mostly in the U.S., reduced money transfers to their families at home at a record pace in January as a U.S. housing slump squeezed construction employment.
Remittances, the second-biggest source of dollar flows into Mexico after oil exports, fell 5.9 percent in January to $1.65 billion from a year earlier, the central bank said today. It was the biggest decline since Banco de Mexico began records in 1995.
The drop may crimp spending by Mexican families and reflects weakness in U.S. construction, the biggest employer of Mexico’s migrants. Wal-Mart de Mexico SAB, the nation’s largest retailer, fell for the first time in three days in Mexico City trading.
“What’s a little disturbing about the data is that, at least historically, remittances tended to turn up when the Mexican economy was showing some slowing,” said Gray Newman, chief Latin America economist at Morgan Stanley in New York.
Mexico’s government expects economic growth to slow to 2.8 percent this year from 3.3 percent in 2007 because of slowing demand in the U.S., which buys about 80 percent of Mexican exports.
The U.S. construction industry accounts for about 20 percent of jobs for Mexicans living in the country, according to the central bank. Almost 90 percent of transfers go to consumption.