Mexico's unemployment rate climbed to 3.0 percent in August, while more than half the workforce remains trapped in informal employment without social-security protection, the national statistics institute INEGI reported Friday. The figures reveal a labor market where headline numbers mask deeper structural problems affecting millions of workers.
The number of unemployed people reached 1.88 million, about 87,000 more than one year earlier. That's despite the labor force growing by 1.3 million over the same period to 62.6 million people. Someone counts as unemployed only if they didn't work even one hour in the survey week and had actively looked for a job—a narrow definition that excludes many struggling workers.
Informal Work Dominates
INEGI's data exposes the precarious reality behind modest unemployment figures. Some 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. These workers lack access to healthcare, pensions, or labor protections that formal employment provides.
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 labor 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.
Long-term unemployment also worsened. People jobless for six months to a year numbered 158,755, against 87,128 one year earlier—an 82 percent increase that signals deepening hardship for those unable to find work.
Manufacturing Sheds Jobs
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 jobs. Restaurants and hotels added 538,000 jobs, a catch-all group of other services 790,000, and government 242,000.
The Federal Reserve Bank of Dallas calculated that formal employment fell by about 9,100 jobs in August, a second straight monthly decline. 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. Over twelve months, IMSS-registered jobs rose by 343,556, or 1.5 percent, to 22.8 million.
Trade Tensions Weigh on Investment
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. Private forecasters polled by Banxico in August expected growth of just 1.3 percent this year.
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.
Why This Matters:
Rising informal employment and underemployment rates reveal a labor market that fails to provide economic security for millions of Mexican workers. More than half the workforce operates without social-security protection, healthcare access, or pension benefits—a structural vulnerability that leaves families one illness or injury away from financial crisis. The 82 percent increase in long-term unemployment suggests workers face mounting barriers to re-entering the formal economy. Manufacturing job losses and declining investment, partly driven by trade policy uncertainty, threaten the quality jobs that provide pathways to middle-class stability. Without stronger labor protections and public investment to create formal employment, Mexico's economic growth won't translate into shared prosperity or the social safety nets workers need.