Economics: Some claims of significant job growth overlook important points of weakness
The most recent labor sector indicators reveal continuing weakness in major segments of the Mexican economy even as some analysts and officials have argued that a frank recovery in employment is underway. While growth trends can be seen in indicators of the formal sector’s employment, average wage and wage mass levels, when we delve deeper into the data we see striking signs of continuing weakness in key areas of the economy. For example, Inegi’s employment indexes based on company hiring reveal that in the service sector and construction industry, employment and pay remain considerably below pre-pandemic levels.
Manufacturing has been unique in delivering considerable job growth. However, the industry now faces a much more complex outlook given the increasing odds the US economy may significantly slow over the next year, a variable that would undercut demand for Mexican exports and lead to a slowing of factory output. With services accounting for more than half of all jobs in Mexico, the fact that tertiary employment remains well below pre Covid-19 levels is also taking a major toll on household incomes. In addition, further labor market pressure can be expected at a time when US immigration policy has greatly multiplied the number of undocumented Mexicans being sent back home.
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