EL PASO, Texas (Border Report) – The El Paso-Juarez economy is showing some improvement but still lags pre-coronavirus levels, new research shows.
An increase in operations at U.S.-run assembly plants in Juarez fueled the creation of 17,500 new manufacturing jobs in that city year-to-year in November and contributed to the 800 new transportation/utilities jobs in El Paso, according to research by UT-El Paso’s Hunt Institute for Global Competitiveness.
Total trade activity is also trending up at El Paso’s ports of entry, although it remains well below 2019 levels. Activity was up $438 million in November in the El Paso Sector, compared to October.
“The auto industry is starting to open its doors and the number of (active employees) has improved given the safeguards that maquiladoras have put in place,” said Mayra G. Maldonado, associate director of the Hunt Institute.
The state of Chihuahua in June began its economic reopening, with plans engaged in the production of auto parts, aerospace components and medical supplies being allowed to operate at 60% capacity. Manufacturing activity has increased across the board since then.
Maldonado said border economists are also investigating “anecdotal evidence” that some manufacturers in Juarez have switched their production to medical supplies, given the outstretched demand for personal protective equipment in the United States due to the ongoing COVID-19 pandemic.
The region, though, is still seeing a downturn in mining and construction, services and trade compared to last year.
“Our cities reached their lowest point in April of 2020 and then they started to improve a little. Juarez is increasing employment, but El Paso and Las Cruces, New Mexico, are still below last year,” Maldonado said. “In terms of economic sectors, leisure and hospitality has been the hardest hit.”
Remittances puzzle solved
It stands to reason that with so many workers – including immigrants – losing jobs or extra work hours due to the COVID-19 pandemic, remittances from the United States to Mexico would go down. The opposite has happened.
Remittances to Mexico went up by nearly $3 billion between January and September of 2020. The border states of Baja and Chihuahua were among the top receptors of remittances, while the border cities of Tijuana, Juarez and Mexicali ranked first, eight and eighteenth.
Maldonado said proximity, the urgency to help relatives in Mexico, travel restrictions, fluctuations in the peso-dollar exchange rate and insecurity over immigration status led to additional remittances.
“Living on the border we don’t realize how integrated our markets are. Transactions that were previously done in person by people going to Juarez are now performed online due to COVID travel restrictions,” Maldonado said. “A second consideration is undocumented migrants for whom losing a job could mean changing cities or going back to their country. They may have started to send their savings back to Mexico electronically because it would be too risky to keep them in the U.S. or carrying it to Mexico.”
The pandemic also caused a temporary jolt in the peso-dollar exchange rate. “Whenever there’s a depreciation (of the peso) we see that people start sending more remittances,” Maldonado said, as U.S. residents realize the money they’ll send to Mexico is worth more pesos to their relatives.
Also, even though immigrant workers endured economic hardship in the United States due to COVID-19, they likely had access to assistance, private or public, according to their immigration status. Their relatives, meantime, may have gotten nothing from the Mexican government and thus need their help, Maldonado said.
For more information on the study, visit the Hunt Institute’s website.