Mexico’s Labor Market Continues to Show Signs of Weakness

October labor market data showed that employment conditions continue to weaken. Although 655 thousand new jobs were created during the month, the increase was driven entirely by informal employment, pushing the informality rate up from 54.9% to 55.4% of the employed population.

The unemployment rate stood at 2.61% in October, below our forecast of 2.76% and the 2.78% expected by consensus. While this could initially be interpreted as a sign of labor market strength, a closer look points in the opposite direction.

The Economically Active Population (EAP) reached 62.5 million people, of which 60.9 million were employed and 1.6 million unemployed. Within the employed population, 55.4% worked in the informal sector, above the 54.9% observed in September. The data confirmed the creation of 655 thousand jobs in October; however, this increase was driven exclusively by informal employment, which added 859 thousand positions, while formal employment fell by 204 thousand.

Year-to-date job creation stands near 1.6 million positions, a significant improvement compared to the 729 thousand recorded in the same period last year.  

While the goods and services sector remains the main source of employment generation—adding 910 thousand new jobs—its momentum has moderated from the 1.1 million jobs created over the same period in 2024, consistent with early signs of stagnation in household consumption. In contrast, the industrial sector has shown a notable recovery, adding 273 thousand jobs, supported by this year’s strong export performance.

Additionally, the agricultural sector has improved markedly, creating 382 thousand jobs, favored by more benign weather conditions and a positive rainy season—well above the 119 thousand positions added over the same period last year.

At the state level, during the third quarter of the year, 13 of Mexico’s 32 states recorded negative job creation compared with the same quarter of the previous year. Data show that trade has been the main engine of job creation nationwide, with 20 out of 32 states posting positive performance in this sector over the last year.

This highlights the heterogeneous nature of economic activity across states, in a context still affected by declines in public investment and pauses in government-led projects. Informality remains a structural challenge. However, signs of recovery could emerge in the coming months as the administration advances its infrastructure agenda, including housing programs, rail projects, and other strategic investments.