Economics: The trend toward reduced hiring extends through July as wages start to reflect the pressure
Labor market indicators for the second quarter and July of this year show a slowdown in employment that largely mirrors how the various segments of the economy are performing. The deceleration is mainly to be found in the primary and manufacturing sectors but has also extended to services, the weightiest of all sectors, which in recent months has shown lower rates of growth, especially in very important areas such as retail trade and restaurants and hotels, which were practically flat in July. Wage indicators continue to show high growth rates but are beginning to show a deceleration.
Employment is expected to sustain its weakening trend, in line with economic growth, largely due to a high base of comparison in the case of a formerly booming construction sector that is expected to undergo a slowdown, continuing weakness in manufacturing and slower growth in services brought on in part by a deceleration of household demand. Such a turn of events would be compounded by lower growth in average wages towards the end of 2024 that would adversely impact the total wage bill and, in turn, translate into a slowdown in private consumption.
In this week’s Outlook we analyze the latest labor market indicators and their implications for the Mexican economy moving forward. And in our indicators section, we provide a more detailed breakdown of the slowing of industrial activity through July, the easing of inflation reported for August, as well as the latest uptick in consumer sentiment even as the pace of the rise in confidence continues to slow.
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