Job Creation Driven by Commerce and Manufacturing in Mexico

In the first quarter of the year, Mexico experienced a significant decline in unemployment rates, reaching its lowest level since 2005, according to the National Survey of Occupation and Employment conducted by Inegi. The data showed a 0.3% decrease compared to the previous quarter of 2022.

Janneth Quiroz, Chief Economist at Monex, emphasized that the improved unemployment rate, not seen since 2005, was mainly driven by job opportunities in the commercial sector, accounting for 42% of the overall increase. This trend demonstrates the strength and recovery of the domestic market after the Covid-19 pandemic. Another 35% of job creation was attributed to the manufacturing sector, which relies on international trade, with a significant portion of Mexican-made goods being exported to the United States.

Quiroz highlighted the pivotal role of commerce and manufacturing in employment growth, with a participation rate of 60.2% during this period, compared to 58.7% in the previous year. The Inegi employment survey further revealed that there were 1.6 million unemployed individuals in the first quarter, while 142,773 people joined the workforce, bringing the total number of formal workers to 58.49 million.

Within the secondary and industrial sectors, 272,616 new job positions were created, with manufacturing accounting for 170,163 and construction for 126,633. In the tertiary sector, there were 203,667 new jobs in transportation, 189,409 in postal services and warehousing, and 107,242 in commerce.

According to the Inegi survey, 7.3% of the employed population considered engaging in underemployment in another field, a slight decrease from the 7.5% reported in the previous quarter. Out of the 142,773 new positions, 91,952 were in the formal sector, while 50,821 were in the informal sector.

In terms of informal labor, Oaxaca (80%), Guerrero (79.3%), and Chiapas (73.9%) reported the highest rates, while Chihuahua (34.1%), Coahuila de Zaragoza (34.6%), Nuevo León (36.7%), Baja California, and Baja California Sur (37.8%) had the lowest rates.

Regarding underemployment, the cities with the highest rates in the first quarter of 2023 were Ciudad del Carmen (22.4%), Coatzacoalcos (15.2%), Tapachula (12.9%), Tlaxcala (12.6%), León (10.4%), and Oaxaca (10.3%). The lowest rates were observed in Querétaro (1%), Tijuana (1.2%), Toluca (1.7%), Aguascalientes (2.7%), and Saltillo (2.9%).

In summary, the first quarter of 2023 witnessed a decrease in unemployment rates in Mexico, primarily driven by job growth in the commerce and manufacturing sectors. This signifies a robust domestic market and a progressive recovery following the challenges posed by the Covid-19 pandemic.

Source: National Survey of Occupation and Employment, Instituto Nacional de Estadística y Geografía (Inegi)