Mexico remittances disappoint despite U.S. job gains; Banorte warns of migrant policy risks

Remittances to Mexico in April reached $4.978 billion, a figure that fell below the expectations of Banorte and the broader market consensus, even as economic and labor conditions in the United States showed signs of improvement. The figure represents a 3.7% annual increase, partly attributed to a more favorable comparison base after a slowdown last year.

In Mexican peso terms, the flows amounted to 86.7 billion pesos. However, this represented a 10% annual decrease due to the peso's appreciation against the dollar. Over the past 12 months, the accumulated remittance amount reached $63 billion, a 2.6% decline compared to the previous period.

The U.S. economy displayed positive signals in April, with industrial production up 0.7% monthly, manufacturing growing 0.6%, and retail sales increasing 0.5%. Personal spending rose 0.4%, and inflation showed moderation. The labor market also saw gains for Mexican workers in the U.S., with the working-age population increasing and employment growing while unemployment decreased, lowering the jobless rate for Mexican migrants from 5.2% to 4.8%.

Looking ahead, Banorte has flagged potential risks stemming from new U.S. identification measures aimed at strengthening customer identification controls within the U.S. financial system. While not directly targeting remittances, these measures could impede undocumented migrants' access to banking and financial services. Banorte suggests this could push remittance flows toward alternative channels, including digital methods and cryptocurrencies, potentially leading to underreporting in official statistics.