Unemployment in Mexico Edges Up to 3%, With 55% of Workers Off the Books
MEXICO · JOBS
Key Facts
- —The country Mexico has roughly 130 million people and an economy of about US$2.1 trillion, close to Australia’s in size. More than four-fifths of its exports go to the United States.
- —Why it matters Mexico has no national unemployment insurance, so few people can afford to stay jobless for long. Most take whatever work they find, often without a contract or social security.
- —Why now US tariffs and a year-by-year review of the North American trade pact have stalled new foreign investment. On Thursday the central bank, Banxico, held its key rate at 6.5 percent.
- —What happened INEGI, the statistics institute, said on Friday 25 September that unemployment in Mexico reached 3.0 percent in August. It was 2.9 percent in July and a year earlier.
- —The numbers 1.88 million people out of work, 87,000 more than a year before. 55.0 percent of workers informal. Factory employment down 263,000 in a year. Seasonally adjusted, the rate held at 2.7 percent.
- —What it means for you Daily life in Mexico will not change. For investors, weak factory hiring says more about US-linked demand than the headline rate does.
- —Still open Whether the rise lasts. September figures are due on Thursday 22 October, and Banxico’s next rate decision on 5 November.
Unemployment in Mexico rose to 3.0 percent of the labour force in August, the national statistics institute INEGI reported on Friday. That was up from 2.9 percent in July and in August 2025.
By most countries’ standards, 3 percent looks like a job market with nothing to spare. In Mexico it mainly shows that people cannot afford to be without work, and more than half of them work informally.
What the August survey shows
INEGI stands for the Instituto Nacional de Estadística y Geografía. It measures jobs through ENOE, the National Survey of Occupation and Employment, which visits a little over 150,000 homes each quarter.
Someone counts as unemployed only if they did not work even one hour in the survey week. They must also have actively looked for a job.
On that measure, 1.88 million people were unemployed in August, about 87,000 more than a year earlier. Over the same period the labour force grew by 1.3 million, to 62.6 million people.
Employment rose by 1.2 million over the year, to 60.7 million. The share of people aged 15 and over who work or seek work rose to 59.3 percent, from 58.8 percent.
The 3.0 percent figure is not adjusted for the seasons. On INEGI’s seasonally adjusted series, unemployment stayed at 2.7 percent, unchanged from July and 0.1 point above August 2025.
So the rise from July largely reflects the usual August pattern rather than a sudden turn. One detail points the other way.
People jobless for six months to a year numbered 158,755, against 87,128 a year earlier. The group is still small, but it nearly doubled.
Why 3 percent does not mean full employment
Mexico has no national unemployment-insurance scheme, a gap the OECD, the club of mostly rich economies, has flagged for years. A worker who loses a job gets no regular benefit while searching.
So most people who lose a job take whatever work they can find, often self-employed or in small unregistered firms. That is why unemployment in Mexico looks so low.
INEGI therefore publishes wider measures. In August, 55.0 percent of workers, or 33.4 million people, were in informal employment, up from 54.8 percent a year earlier.
Informal means working without social-security protection, or for a business that is not registered. The OECD finds that only about one in ten informal employees has a written contract.
Informal work absorbed most new jobs earlier this year, as Mexico Informality Drove 82% of Job Growth in Second Quarter showed.
Another 7.0 percent of workers, some 4.3 million people, were underemployed, meaning they wanted and were available to work more hours. Seasonally adjusted, that rate rose to 6.8 percent from 6.4 percent in July.
INEGI also counts 5.0 million people outside the labour force who say they could work but are not looking. They do not appear in the unemployment rate at all.
INEGI’s broadest gauge, called critical working conditions, covers people on too few hours against their will or on very low pay. It reached 37.8 percent of workers, up from 37.3 percent a year earlier.
Factories shed jobs while services hire
The sector breakdown shows where the pressure sits. Manufacturing employed 9.7 million people in August, 263,000 fewer than a year earlier.
Farming lost 290,000 workers and retail and wholesale trade 161,000. Construction added 146,000.
The gains came in services. Restaurants and hotels added 538,000 jobs, a catch-all group of other services 790,000, and government 242,000.
Manufacturing matters because it is the part of Mexico most tied to US demand. Transport equipment, such as cars and parts, makes up about 21 percent of factory output, INEGI data show.
The shift has not made work more formal: the informality rate rose 0.2 point over the year. The share working in unregistered household businesses rose 0.7 point, to 30.3 percent.
The formal payroll count tells a similar story
A second source counts formal jobs: registrations with IMSS, the Mexican Social Security Institute, which covers private-sector employees. In August it recorded a net gain of 38,319 jobs, after a loss of 19,550 in July.
Traditional jobs rose by 86,765, while registrations of app-based platform workers fell by 48,446. Even so, platform registrations are up 49.8 percent over twelve months, IMSS said.
Adjusted for the seasons, the picture is weaker. The Federal Reserve Bank of Dallas calculates that formal employment fell by about 9,100 jobs in August, a second straight monthly decline.
Over twelve months, IMSS-registered jobs rose by 343,556, or 1.5 percent, to 22.8 million. In August 2023 the monthly gain was 111,736, according to the newspaper El Economista.
For scale, 22.8 million is fewer than four in ten of the 60.7 million people the survey counts as working. IMSS leaves out government staff, who have their own institute.
Tariffs, a trade review and a central bank on hold
The United States buys about 83 percent of Mexico’s exports, according to the consultancy Deloitte. Most goods still enter duty-free, but US tariffs fall on cars, auto parts, machinery and steel.
The bigger drag is uncertainty. In July Washington declined to renew the US-Mexico-Canada Agreement, the regional trade pact, opting for annual reviews instead, Reuters reported.
New foreign investment in Mexico fell 13 percent in the first half of 2026, Reuters found. Fixed investment fell year on year for 19 straight months through May, according to IMEF, Mexico’s finance executives’ institute.
The central bank, Banco de México or Banxico, held its overnight rate at 6.50 percent on Thursday 24 September. It was the third meeting in a row without a change.
Banxico said it need not track the US Federal Reserve mechanically (see Banxico Holds Rates at 6.5% and Splits From the Fed). Private forecasters polled by Banxico in August expected growth of 1.3 percent this year.
What comes next
INEGI publishes the September figures on Thursday 22 October. Banxico releases the minutes of its September meeting on 8 October and decides rates again on 5 November.
The August reading does not signal a recession or mass lay-offs. The seasonally adjusted rate has not moved, and total employment is 1.2 million higher than a year ago.
Nor does one month settle whether weaker hiring will push Banxico to cut again. The bank has named no date for its next move.
What August does show is a job market absorbing people mainly outside factories and, often, outside the formal system. That is the part to watch while the trade review drags on.
More: Mexico news in English, every day from The Rio Times.
Frequently Asked Questions
Why is unemployment in Mexico so low?
Mexico has no national unemployment insurance, so few people can afford to go without work while they search. Many take informal jobs instead, and the survey counts anyone who worked even one hour as employed.
What does informal work mean in Mexico?
INEGI counts as informal anyone working without social-security protection, or in a business that is not registered. In August that was 55.0 percent of workers, or 33.4 million people.
Did Mexico lose formal jobs in August?
Not on the raw count: IMSS registered a net gain of 38,319 jobs. A seasonally adjusted estimate by the Federal Reserve Bank of Dallas shows a small decline, of about 9,100.
When is the next jobs report?
INEGI publishes the September survey results on Thursday 22 October 2026. Banxico’s next interest-rate decision follows on 5 November.
Sources: INEGI, Encuesta Nacional de Ocupación y Empleo, monthly indicators for August 2026 (bulletin 606/26, 25 September 2026) and July 2026; IMSS formal-employment report for August 2026, as reported by EFE, El Economista, Luces del Siglo and LJA.mx; Federal Reserve Bank of Dallas, Mexico economic update, 23 September 2026; Banco de México decision of 24 September 2026, as reported by El Economista, El Financiero and Proceso, and Banxico’s 2026 monetary-policy calendar; Reuters, 1 September 2026; Deloitte Insights, Mexico economic outlook 2026; Mexico Business News on INEGI GDP data and IMEF; OECD labour-market and informality reports; IMF World Economic Outlook database.
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