Mexico's unemployment rate climbed to 3.0 percent in August, up from 2.9 percent in July and matching the increase from August 2025, as the national statistics institute INEGI reported Friday. The uptick comes amid growing concerns about the quality of employment, with informal work now accounting for more than half of all jobs and manufacturing shedding hundreds of thousands of positions.
The number of unemployed people reached 1.88 million, about 87,000 more than one year earlier. The labour force grew by 1.3 million over the same period to 62.6 million people. INEGI's reading came from its ENOE, the National Survey of Occupation and Employment, which visits a little over 150,000 homes each quarter. Someone counts as unemployed only if they didn't work even one hour in the survey week and had actively looked for a job.
Informal Economy Expands
The headline unemployment figure doesn't capture the full picture of Mexico's labor market challenges. INEGI reported that 55.0 percent of workers, or 33.4 million people, were in informal employment, up from 54.8 percent one year earlier. Informal means working without social-security protection, or for a business that isn't registered. Another 7.0 percent of workers, some 4.3 million people, were underemployed, meaning they wanted and were available to work more hours. Seasonally adjusted, that rate rose to 6.8 percent from 6.4 percent in July.
INEGI also counts 5.0 million people outside the labour force who say they could work but aren't looking. Its broadest gauge, called critical working conditions, reached 37.8 percent of workers, up from 37.3 percent one year earlier. People jobless for six months to a year numbered 158,755, against 87,128 one year earlier.
Manufacturing Hemorrhages Jobs
The composition of employment growth raises red flags about Mexico's economic trajectory. Manufacturing employed 9.7 million people in August, 263,000 fewer than one year earlier. Farming lost 290,000 workers and retail and wholesale trade 161,000. Construction added 146,000. Restaurants and hotels added 538,000 jobs, a catch-all group of other services 790,000, and government 242,000.
A second source of formal jobs, registrations with IMSS, the Mexican Social Security Institute, recorded a net gain of 38,319 jobs in August, after a loss of 19,550 in July. Traditional jobs rose by 86,765, while registrations of app-based platform workers fell by 48,446. Even so, platform registrations are up 49.8 percent over twelve months, IMSS said. Over twelve months, IMSS-registered jobs rose by 343,556, or 1.5 percent, to 22.8 million.
Trade Uncertainty Weighs on Investment
The Federal Reserve Bank of Dallas calculated that formal employment fell by about 9,100 jobs in August, a second straight monthly decline. The United States buys about 83 percent of Mexico's exports, according to the consultancy Deloitte. Most goods still enter duty-free, but US tariffs fall on cars, auto parts, machinery and steel. Reuters reported that in July Washington declined to renew the US-Mexico-Canada Agreement, opting for annual reviews instead.
New foreign investment in Mexico fell 13 percent in the first half of 2026, Reuters found, and fixed investment fell year on year for 19 straight months through May, according to IMEF, Mexico's finance executives' institute. Banco de México, or Banxico, held its overnight rate at 6.50 percent on Thursday 24 September. It was the third meeting in a row without a change. Banxico said it need not track the US Federal Reserve mechanically. Private forecasters polled by Banxico in August expected growth of 1.3 percent this year.
INEGI publishes the September figures on Thursday 22 October, Banxico releases the minutes of its September meeting on 8 October and decides rates again on 5 November.
Why This Matters:
Mexico's labor market is sending warning signals that go well beyond the modest headline unemployment increase. The shift from manufacturing to lower-productivity service jobs, the expansion of informal work without social protections, and the collapse in fixed investment for 19 straight months all point to structural weaknesses that monetary policy alone can't address. The decline in manufacturing employment by 263,000 workers is particularly concerning given Mexico's proximity to the United States and its role in North American supply chains. Trade uncertainty, including Washington's decision to move to annual reviews rather than renewing the US-Mexico-Canada Agreement, is clearly deterring the foreign investment Mexico needs to create quality formal-sector jobs. With private forecasters expecting just 1.3 percent growth this year and more than half of workers in informal employment, Mexico faces the challenge of creating an environment where businesses can confidently invest and hire, rather than managing decline through government employment expansion.