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Mexico manufacturing jobs fall 4 pct in June

By Greg Brosnan

MEXICO CITY, Aug 27 (Reuters) - Employment in Mexico's manufacturing sector fell 4 percent in June from the same month a year earlier, government statistics institute INEGI said on Wednesday.

Manufacturers have scaled back in the face of diminished demand from the United States, the destination of 90 percent of Mexican exports.

Average real wages in the sector grew 2.4 percent in June, compared with the year-ago period, but hours worked fell 4.1 percent, INEGI said.

In the January-June period, employment fell 3.4 percent and hours worked dropped 4.1 percent.

The drop in manufacturing employment is the latest in a rash of depressing economic data for President Vicente Fox, who is battling rising unemployment and a stagnant economy as the country struggles to recover from the 2001 recession.

Unemployment rose to its highest level in more than five years in July.

Gross domestic product grew 2.3 percent in the first three months of the year, but just 0.2 percent in the second quarter due to a weak industrial sector.

Manufacturing jobs fell across the board in June, but the greatest drop by far was in the metal products, machinery and equipment sectors, which plummeted 8.4 percent in a reflection of the hard times hitting Mexico's auto industry.

More negative data from the embattled sector is expected in coming months as car makers facing increased competition in the U.S. market from countries such as China, adjust to stay afloat.

Auto production and exports both fell in July as car makers eased output, and earlier this month workers at Volkswagen's Mexico plant agreed to cut their work week to four days to avoid 2,000 layoffs.

On Wednesday, Delphi Corp. , the world's largest auto parts maker, said it could move part of its production operations out of Mexico due to high costs.

Employment in the textile, apparel and leather industries fell 5.8 percent, INEGI said.

Mexico's textile and apparel sectors have been among the worst hit by competition for the U.S. market from China, where low wages and a yuan economists consider undervalued are undercutting Mexican exporters.