Mexico's Formal Job Market Stagnates for 19 Months

Mexico's formal employment sector has accumulated only 0.6% growth since October 2024, with IMSS employer registrations declining for 22 consecutive months and GDP contracting 0.8% in 1Q26. The weakness affects manufacturers, exporters, SMEs, and investors operating in Mexico, where falling business confidence and negative gross fixed investment continue to suppress formal job creation across most states and key industries.

Mexico's formal labor market recorded a net gain of only 24,000 jobs in April 2026, according to data from the Mexican Social Security Institute (IMSS). This marks 19 consecutive months of near-stagnation in formal employment creation since October 2024, a period in which the sector has accumulated growth of just 0.6%.

The figures point to conditions that go beyond a temporary slowdown, argues BBVA Research. The number of employers registered with IMSS fell 2.7% year-over-year in April, extending a streak of 22 consecutive months of annual declines. That erosion of the formal employer base, the report argues, signals a structural deterioration in the economy's capacity to generate quality jobs, not a cyclical dip.

Mexico's GDP contracted 0.8% in the first quarter of 2026. The Global Business Confidence Index remained below the 50-point threshold for the 14th consecutive month in April, posting an annual variation of negative 0.4 points. Gross fixed investment fell 0.8% month-over-month in February and contracted 3.6% year-over-year, compounding the pressure on formal job creation.

A Formal Sector in Retreat, an Informal Sector in Expansion

The gap between Mexico's formal and informal labor markets widened during the period under review. According to data from INEGI's National Survey of Occupation and Employment (ENOE), formal employers accumulated a decline of 10.4% since the fourth quarter of 2023, while informal employers grew 11.6% over the same period. IMSS-registered employers saw a cumulative decline of 3.8% through April 2026.

BBVA Research notes that while IMSS employer registrations correspond to administrative units rather than individual companies, the persistence and duration of those declines — combined with other indicators of economic deterioration — suggest the trend reflects actual contraction in the formal productive base, particularly among smaller businesses.

This divergence carries consequences beyond the jobs count. Informality effectively imposes what analysts describe as a hidden cost on employer operations, in the form of higher turnover, reduced skill accumulation, limited technology adoption, and weaker supply chain reliability. In the labor market context Mexico faces in 2026, those costs compound the difficulty of a recovery. The International Labour Organization (ILO) estimates that by 2026, some 2.1 billion workers globally would be in informal employment, with Latin America and the Caribbean carrying an informality rate of 51.1% of total employment.

Mexico closed 2025 with only 278,697 net new formal jobs added over the full year, according to the think tank México, ¿cómo vamos? — far short of its benchmark of 1.2 million. Alberto Alesi, General Director for Mexico, the Caribbean and Central America, ManpowerGroup, describes 2026 as likely to be "notably more conservative" if the trends established in 2025 continue, reflecting caution among businesses navigating structural reforms, wage increases, and rising labor costs.

Sector and Regional Performance Diverge

April's sectoral data showed considerable variation across industries, though the overall balance remained constrained. Construction posted its best monthly performance of the year, growing 1.2% on a seasonally adjusted basis and extending four consecutive months of gains. The services sector grew 0.24% month-over-month and 2.1% annually, consolidating its position as one of the primary supports for formal employment.

Transportation and communications posted 0.93% monthly growth and a 10.9% annual rate, though BBVA Research cautions that those figures are heavily influenced by the incorporation of digital platform workers into the IMSS registry, a process initiated through a government pilot program launched in July 2025 that registered over 1.26 million platform workers in a single month. Analysts have described elements of that program as "statistical formalization," a process in which workers appear in official registries without a corresponding rise in job quality, training or productivity.

Manufacturing showed a marginal monthly gain of 0.25% in April following an extended period of weakness, though annual employment in the sector continued to contract at -1.7%. The sector had already shed 127,200 jobs in 2025 alone, the second-largest annual decline in 20 years, exceeded only by losses during the 2008-2009 financial crisis, according to México, ¿cómo vamos? commerce fell 0.13% month-over-month, consistent with a slowdown in private consumption. 

BBVA Research's Big Data Consumption Indicator recorded a real monthly decline of 0.4% in April on a seasonally adjusted basis, while goods consumption fell 0.5%. Agriculture posted the sharpest contraction of any sector, declining 0.69% month-over-month and 3.4% annually, accumulating 32 consecutive months of annual losses.

Regional performance remained uneven. Twenty of Mexico's 32 states recorded net losses in formal employment between October 2024 and April 2026. Campeche posted the steepest decline at negative 9.3%, followed by Sinaloa at negative 5.4% and Guerrero at negative 3.1%. Chiapas, Tamaulipas, Zacatecas, and Coahuila each fell between 1.9% and 2.7%. Industrial states historically associated with formal job creation, including Queretaro and Nuevo Leon, recorded modest gains of 0.9% and 0.4% respectively, reflecting the manufacturing sector's prolonged weakness. The State of Mexico registered the strongest performance among all entities at 7.9%, a figure BBVA Research attributes in part to its concentration of platform worker registrations, which partially offset broader national weakness.

Wages Slow, Outlook Tied to Investment Recovery

Real wages grew 2.3% annually in April 2026, a deceleration of 0.1 percentage points from March, and are now approaching their 2012-2024 historical average of 2.0%. The real wage bill grew 3.8% annually in total, but fell to 3.1% when platform workers are excluded, a measure BBVA Research labels a closer approximation of underlying labor income dynamics. Both figures remain below their historical averages, indicating that job market weakness continues to constrain wage bill growth despite some income resilience.

BBVA Research's report states that a recovery in formal employment will depend substantially on a rebound in investment, which remained in negative territory through the first quarter of 2026, and a restoration of business confidence. Neither condition was met as of April.

The report does identify one near-term factor that could temporarily boost job creation: the 2026 FIFA World Cup, co-hosted by Mexico, the United States, and Canada. BBVA Research anticipates employment gains beginning in May or June, concentrated in service sectors and in host cities including Mexico City, Nuevo Leon, and Jalisco. However, the report characterizes that impulse as transitional, likely to recede once the tournament concludes and construction and infrastructure employment linked to the event begins to unwind.