Fading Trust in Employment Future Affecting Household Incomes
Mexican consumers are worried about the deteriorating job market and its potential impact on their finances over the next year. The Consumer Confidence Index (CCI), which assesses employment expectations for the upcoming 365 days, dropped by 5.3 points in October—the largest decline since January 2021, marking a 57-month low.
Key Data Points
- The CCI has been declining for 11 consecutive months amidst a slowing national economy.
- In September, the unemployment rate rose for the third straight month to 2.98% of the Economically Active Population (EAP).
- Formal job creation has significantly deteriorated, with only 400,671 new jobs created in the first ten months of the year—200,000 fewer than the same period in 2024, marking a 32.6% decrease according to the Mexican Social Security Institute (IMSS).
- Mexico requires 100,000 new jobs per month (1.2 million annually) to meet its needs.
Personal Impact and Expert Opinions
Adrián, a factory worker in Guanajuato, shares his concerns about the job market: “We’ve been told that more layoffs are coming due to low demand for labor, with significant adjustments expected in the next six months.”
Gabriela Siller, Chief Economist at Banco Base, describes the employment data as “preoccupying,” suggesting that a substantial deterioration in the job market could affect household incomes and, consequently, consumer spending.
The Bank of Mexico (Banxico) acknowledges a cooling labor market and has revised its employment generation expectation for the year from 110,000 to 290,000 down to 40,000 to 20,000. Banxico attributes this potential increase to the integration of digital platform workers into the mandatory social security regime.
However, David Cervantes, an analyst at BBVA Mexico, clarifies that this integration does not represent new job creation but rather the formalization of existing activities. He emphasizes that, despite this progress in social security coverage and access, the labor market remains sluggish.
Employment: Crucial for Poverty Reduction
The World Bank stresses that to reduce poverty and ensure shared prosperity, economic growth must generate more quality jobs that are more inclusive for historically disadvantaged groups such as women, young people, and the poor.
“Obstacles to employment must be removed to ensure labor market opportunities for these groups,” the international organization advises.
