Weak Investment, USMCA Doubts Curb Job Growth in Mexico

CEESP, the private-sector research arm of Mexico's Business Coordinating Council, attributes slowing quality job creation and constrained GDP growth to weak private investment, rising labor costs, and uncertainty surrounding the USMCA review. The findings affect investment planning across manufacturing, trade, and labor-intensive sectors, as gross fixed investment has declined for 17 consecutive months despite record first-quarter FDI of US$23.591 billion. 

Soft private investment, rising labor costs, and lingering uncertainty over the review of the USMCA are limiting quality job creation and constraining Mexico's economic growth, according to the Center for Private Sector Economic Studies (CEESP), the research arm of the Business Coordinating Council (CCE).

"Weak investment, rising labor costs, and international uncertainty surrounding the USMCA are limiting the expansion of capital stock, inhibiting the creation of quality jobs, and slowing the pace of growth," CEESP says.  

The organization adds that improving household welfare depends on the sustained creation of well-paid, quality employment, a goal it says remains out of reach while investment stays subdued. CEESP notes that labor market data point to the need for new formal positions, a need it says can only be met through greater investment flows that stimulate productive activity.

CEESP's warning follows a pattern documented throughout 2026. Gross fixed investment has posted 17 consecutive months of annual decline, prompting the federal government in June to launch a 30-day fast-track approval mechanism for strategic projects worth MX$2 billion or more, through a new Presidential Office for Investment Promotion. The measure targets sectors under Plan Mexico, including energy, semiconductors, automotive, and pharmaceuticals, and was unveiled alongside a US$4.6-billion investment commitment from Mercado Libre for 2026.

Even so, growth expectations remain cautious. Banco de Mexico's forecast for full-year 2026 gross domestic product (GDP) growth stands at 1.1%, down from earlier projections, a figure CEESP cites as consistent with private sector analysts polled by the central bank. The organization expects this cautious stance to persist through the second half of the year, driven in part by concern over how the USMCA review, launched under a 2026 schedule mandated by the treaty, will ultimately unfold.

On employment, CEESP points to Mexican Social Security Institute (IMSS) data showing that formal job registrations rose by 61,023 in June 2026, a 2% annual increase equivalent to 454,038 additional registrations. The organization cautions that this growth does not fully reflect new job creation, noting that slightly more than half of these registrations correspond to workers who already held employment and were newly enrolled with IMSS, largely tied to digital platform positions. Excluding these registrations, annual growth in formal employment falls to 1%, according to CEESP.

The figures track closely with IMSS's own June report, which put total formal employment at a record 22.78 million registered workers, the highest figure ever recorded for that month, with wage growth continuing to outpace inflation. CEESP's more cautious reading underscores a broader divergence in how the labor market's underlying strength is being assessed, even as headline numbers point to continued expansion.

CEESP also flags mixed signals in broader activity indicators. The Global Economic Activity Indicator (IGAE) rose 1.4% month over month in April, a figure later revised 0.2 percentage points higher, fueling optimism about a possible rebound given its 2.5% annual increase, the strongest since March 2024. That optimism proved short-lived: IGAE fell 0.3% month over month in May, and Mexico's national statistics institute (INEGI) estimates a further increase of only 0.2% for June, which CEESP says confirms that April's improvement was not sustained. Based on these results, CEESP projects second-quarter economic growth of 2%, the strongest quarterly pace in nine quarters, though first-half annual growth would still total a more modest 1.2%.

Household consumption, another key growth driver, shows similar caution. INEGI reported that retail sales fell 0.6% month over month in May after two consecutive months of gains. While this still translated into 2.4% annual growth, CEESP notes it was the weakest annual pace in ten months.

The findings arrive as Mexico's broader investment picture shows resilience alongside the caution CEESP describes. Foreign direct investment (FDI) reached US$23.591 billion in the first quarter of 2026, a record for the period and a 10.4% increase over the same period in 2025, even as investors remain attentive to the USMCA review process and shifting US trade policy. That contrast, strong FDI inflows against weaker gross fixed investment and consumption, illustrates the uneven footing CEESP describes heading into the second half of the year, with the outcome of the USMCA review widely seen as a determining factor for investment decisions and employment creation through 2027.