Mexico’s Job Market Faces Setback: 626,000 Positions Lost in August

Mexico’s job market experienced a significant downturn in August, shedding 626,770 positions. This setback followed a strong start to the second half of the year for the country’s employment sector.

Only the manufacturing and restaurant industries managed to add jobs during this period. August’s job losses marked the second-worst figure for Mexico in 2024.

Despite this, negative employment trends have only occurred three times this year in the country. Seasonal factors largely explain these fluctuations in the Mexican labor market.

The unemployment rate in Mexico inched up by 0.1 percentage points to 3.0%. This marks the third consecutive month of increase for the country. The rate now approaches its historical average for Mexico.

The decline in employment mainly affected Mexico‘s Non-Economically Active Population (NEAP). Over a million people joined this group. Most were classified as “unavailable” for work in the country.

Gabriela Siller, Economic Analysis Director at Banco Base, offers insight into Mexico’s situation. She notes that retirees, students, and homemakers typically make up the NEAP in the country.

The surge in unavailable workers suggests that job losses may not indicate a weakening labor market for Mexico.

Job Market Challenges in Mexico

Informal employment in Mexico bore the brunt of the losses, accounting for 74.7% of eliminated positions. Formal employment in the country saw a milder reduction of 158,414 jobs.

The informal employment rate in Mexico dipped slightly from 54.5% to 54.3%. However, it has risen by 0.7 percentage points this year. Siller emphasizes that boosting formal employment remains a key challenge for Mexico.

Subordinate work in Mexico saw the biggest decline, losing 410,239 jobs. Employers cut 255,917 positions. Self-employment was the only category to grow in the country, adding 129,359 workers.

In addition, the industrial sector was the sole area of growth in Mexico. Manufacturing added 388,499 jobs, offsetting construction’s loss of 185,114 positions in the country.

Service activities suffered the most significant job losses in Mexico. Restaurants added 301,460 jobs, but other subsectors declined. Social services lost 420,316 jobs, government shed 211,729, and commerce dropped 140,254 in the country.

Agriculture, livestock, and fishing also contributed to the downturn in Mexico, eliminating 226,815 jobs. Despite August’s setback, the year-to-date job creation in Mexico still stands at 788,412 positions.

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