Employment will grow 2.1% this year; Uncertainty affected by reforms: BBVA

Mexico City. This year, employment will have a growth of 2.1 percent, a forecast that depends on economic growth expectations, “which are largely conditioned on the dissipation of the uncertainty generated by the recent legislative reforms,” BBVA announced this Wednesday. , the bank with the greatest presence among those operating in the country.

An analysis by the institution, with figures taken from the Mexican Social Security Institute (IMSS), indicated that formal employment grew 1.6 percent in September, which is equivalent to 91 thousand new jobs, adding a total of 456 thousand jobs created so far this year.

“However, this growth was once again lower than expected, which has accentuated the slowdown in formal employment. This trend, added to the economic forecasts, has affected employment growth expectations in both the short and medium term,” stated the report prepared by senior economist, David Cervantes Arenillas.

He mentioned that permanent employment maintains a positive growth trajectory throughout the year, which provides relative strength to formal employment with the creation of 458 thousand new jobs, and, in contrast, temporary employment is affected by the slowdown. in sectors such as agriculture and manufacturing, which is why a drop of 2 thousand jobs has been noted compared to the beginning of the year.

“Although it is likely that casual employment will rebound in the months of October and November due to seasonal factors, this increase is not expected to have a significant impact on total employment by the end of the year,” he explained.

Employment by sectors

He explained that manufacturing, one of the main drivers of formal employment growth, has suffered a marked slowdown and until September has grown 1.8 percent, a lower level when compared to the growth that occurred in the same period of 2023 and 2022. , of 3 and 4.7 percent, respectively.

“As this sector has been and continues to be key to the solid performance in job creation, its current weakness is negatively affecting the growth of aggregate employment,” stated BBVA.

He said that in the other sectors, the tertiary sector has proven to be the most resilient in job creation so far this year, and in this context, commerce had the greatest contribution to employment growth in September, since it contributed 0.6 percentage points to total growth, and secondly, the services and transportation sectors contributed 0.4 percentage points each.

However, he explained, the situation of the agricultural sector is “worrying”, which continues with a lag in employment and has registered negative annual growth rates for 13 consecutive months, a trend that is largely due to the drought that has especially affected to states like Sinaloa, Sonora and Chihuahua.

The construction, with various results

BBVA added that the construction sector, which had shown a continuous slowdown but with positive growth in employment, experienced a drop of 0.3 percent in September, the equivalent of a monthly loss of 16.8 thousand jobs.

“Given that this sector is highly seasonal and is affected by project closures at the end of the year, a significant rebound is not expected in the coming months. “It is likely that additional job losses will accumulate in the remainder of the year,” he added.

In this sector, the bank said, four entities stand out for their growth dynamics and their contribution to total employment so far this year: Chiapas, Hidalgo, State of Mexico and Nuevo León, while from January to date Tabasco has lost 18.5 thousand jobs, where the drop is the result of the lack of potential investments in the short term that could mitigate the negative impact left by the completion of the refinery works.

“While we expect job growth to regain some traction in October and November, we expect employment to close in 2024 at 2.1 percent annual growth and 2.5 percent in 2025. This growth will depend on meeting economic growth expectations. ”BBVA concluded.