Overview and Key Findings
Mexico’s manufacturing sector continued to experience a prolonged slump in May, with wages falling for the fourth consecutive month. The Encuesta Mensual de la Industria Manufacturera (EMIM) reported a 0.3% monthly decline and a 2% annual decrease in wages, marking 27 months of continuous reductions.
Out of the 21 manufacturing branches, 14 showed annual wage reductions. The most affected subsectors monthly were clothing (-2.5%), printing (-0.9%), transportation equipment (-0.9%), paper (-0.8%), and non-metallic minerals (-0.7%). Annually, transportation equipment (-8%), clothing (-6.2%), leather and fur (-5.5%), textile input (-4.9%), and wood (-3.6%) experienced the most significant drops.
Impact on Specific Industries
The automotive sector, a crucial part of Mexico’s manufacturing industry, has been particularly hard-hit. The transportation equipment manufacturing branch saw a 6.6% wage decline by May, with the automotive industry playing a significant role.
Despite denials from business associations, the sector has been affected by Donald Trump’s tariff policies. For instance, General Motors in Coahuila eliminated a third shift at its Ramos Aristepe plant, resulting in 850 layoffs due to reduced production of vehicles destined for the US market.
In Puebla, Volkswagen’s unstable operations have led to technical strikes and announcements of further stoppages, threatening jobs. Meanwhile, the National Association of Producers of Buses, Trucks, and Semi-trailers (ANPACT) reported no information on job cuts, despite a challenging first half of the year in production, sales, and exports.
The Mexican Automotive Industry Association (AMIA) confirmed no reported job losses in automotive plants, even operating at 90.8% plant capacity.
Economic Context and Future Outlook
Monex economists, Janneth Quiroz and Rosa M. Rubio, stated that the manufacturing sector’s risk balance remains tilted upwards due to ongoing trade tensions with the US and uncertainties surrounding domestic reforms like judicial changes and competition policies.
The overall climate in the sector is one of uncertainty, driven by the unpredictable implementation of tariff policies by the US under President Donald Trump and concerns about how internal reforms will affect Mexico’s business environment.
Key Questions and Answers
- What is the current state of manufacturing jobs in Mexico? Manufacturing jobs have experienced a 1.3% decline from January to May, continuing a trend of three consecutive quarters of reductions. This follows a 1.7% decrease in 2024 and a 0.2% contraction in 2023.
- Which manufacturing sectors are most affected? The transportation equipment sector, heavily influenced by the automotive industry, has seen a 6.6% wage decline through May. Other hard-hit sectors include clothing (-8% annually), leather and fur (-5.5%), textile inputs (-4.9%), and wood (-3.6%).
- What are the primary concerns for the manufacturing sector? The main concerns are trade tensions with the US, particularly under President Donald Trump’s tariff policies, and uncertainties surrounding domestic reforms like judicial changes and competition policies.
