Economics: A weak labor market in the January–May 2026 period
Mexico's labor market in the first four months of 2026 reflects the broader weakness of the economy. Total employment grew just 1.2% year on year in April, with growth concentrated almost entirely in the informal sector (up 2.0%), while formal employment contracted slightly (-0.1%). This marks the exhaustion of the formalization gains produced by the 2021 outsourcing reform and the return of informality to its traditional role as an economic buffer. The IMSS figures through May also point to a weakening trend, consistent with the broader stagnation of the economy as a whole.
Construction has seen a notable employment rebound, but overwhelmingly in informal conditions. Manufacturing and services have decelerated, with the latter undergoing a partial formalization process driven by digital platform workers — although at a slower pace than initially projected.
IMSS contribution wages continue to grow in real terms but are decelerating, and the sustained compression of the gap between the average contribution wage and the minimum wage — from a ratio of 4.5 to 1 in 2016 to just 2 to 1 today — is increasing cost pressures on formally registered firms, particularly in labor-intensive service sectors. Taken together, weak employment growth, rising informality, and decelerating real wages point to continued softness in household consumption and are consistent with our GDP growth forecast of 0.9% for 2026.
Regarding the economic indicators of last week, the aggregate demand for goods and services grew 5.2% YoY in real terms in the first quarter of 2026, well above the 2025 average of 1.8%, even though GDP grew only 0.4% compared to 0.7% the previous year.
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