Mexico Replaces China as U.S. Supplier With No Wage Gains: Jobs – Bloomberg 06-15-12

Salient to Investors:

Mexican wages after inflation have risen at an annual pace of 0.4 percent since 2005, lower than Brazil, Colombia and Uruguay. A third of Mexicans work in the informal economy without steady income.

Cheap labor has helped Mexico pass China as a low-cost supplier of manufacturing goods to the U.S., which buys 80 percent of Mexican exports, and putting Mexico on a sounder footing than Brazil to weather a prolonged global downturn. and probably outperform it for a second consecutive year.

 

Mexican inflation is under control.

Investors benefit from laws that limit government deficits and from trade accords with more than 30 nations. For companies serving U.S> consumers, Mexico offers transportation savings over Asian manufacturers after the tripling of oil prices in the past decade.

IMF reports that Mexico’s per- capita GDP has risen 48 percent since 1999 on a purchasing-power-parity basis, the least among Latin America’s seven biggest economies.

Pew Research Center reports 12 million Mexicans moved to the U.S. in the past four decades, more than half illegally. Net migration fell to zero between 2005 and 2010 but could reverse if U.S. expansion picks up.

OECD ranks Mexico’s education system last out of 34 countries for enrolled high school-age students.

Predictions:

Economists project Brazil will grow around 2.5 percent in 2012.

Nomura analysts expect Mexico will become the most dynamic economy in the region in ten years.

Read the full article at http://www.bloomberg.com/news/2012-06-14/mexico-replaces-china-as-u-s-supplier-with-no-wage-gains-jobs.html