Economics: Stagnant employment sets the stage for further weakening of private consumption in late 2025 and early 2026

MEXICO - Report 20 Oct 2025 by Mauricio González and Francisco González

The total employed population in Mexico shrank -0.3% yoy in August and on average for the first eight months of this year it remains flat, according to ENOE figures. This flatlining follows the trend of slowing job growth that began last year and is in line with the sputtering of the economy overall. As in the second quarter and again in July, any increase in employment has been concentrated in the informal sector, where it rose just over half a percentage point in August after having risen 3.8% in July. Meanwhile, formal employment contracted in both August (-1.5% yoy) and July (-2.8%). This stagnation of the employed population partly explains the weakening of private consumption that is expected to endure through the remainder of 2025 and into early 2026, posing an additional obstacle to achieving a significant rebound in economic growth next year.

Among the economic indicators released last week, manufacturing employment experienced an annual decrease of -2.7%, led lower by a sharp drop-off in the automotive industry (-8.3% YoY), in keeping with trends of recent months and the enduring uncertainty surrounding tariffs. This week two important indicators are on the calendar: the IGAE for August and inflation for the first half of October. We don’t expect the IGAE to show any variation in economic activity given the significant declines in industrial activity and increasingly sluggish growth in services. As for annual inflation, we expect it to be slightly below 4.0%.

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