INEGI: Unemployment Contracts Following Strong Job Creation

Mexico’s unemployment rate dropped to 2.4% following the addition of over 660,000 formal and informal employment opportunities in March, according to data from INEGI's National Occupation and Employment Survey (ENOE). This robust growth serves as a positive indicator of Mexico's potential economic performance in 2023, which is suspected to be driven by nearshoring projects and investments.

“The labor market seems to reflect the forcefulness of the recent trends in the Mexican economy and provides evidence of the magnitude of the opportunities by nearshoring projects in the years to come,” Marcos Arias, Economic Analyst, Monex, told El Financiero. This is supported by the continued inflow of foreign direct investment into Mexico, a boom in industrial construction and concerted employment campaigns from professional services companies. 

This market optimism has helped Mexico’s unemployment rate fall despite adding an additional 2.4 million people to its economically active population (EAP), referring to people aged 15 and over. Effectively, the participation rate of Mexico's EAP rose from 60.2% to 60.5%, thereby indicating that job creation grew at a faster rate than the growth of the labor population. Correspondingly, underemployment and labor informality rates also decreased, 6.8% and 0.8%, respectively, year-over-year.

These positive indicators come as a result of strong, formal gains in the services sector that added 229,661 jobs, mainly in government with 177, 074 jobs ahead of Mexico’s proximate general election cycle. This is followed by the addition of 184,847 jobs in the secondary sector, of which 109,975 were in construction, a figure corresponding with an observable industrial construction boom in key manufacturing hubs in northern and central Mexico. The primary sector, concerning the extraction and production of raw materials, created an additional 252,112 jobs. 

Altogether, this labor market reflects a strong Mexican economy, which saw a year-on-year GDP growth of 3.9% and a quarterly growth of 1.1% in the first quarter of 2023, according to estimate forecast provided by INEGI.