Manufacturing employment in Mexico stops nine-month declines with April data

Manufacturing employment in Mexico stops nine-month declines with April data

El Economista – Mexico City

In April, employment in the manufacturing sector rose a modest 0.3% monthly, but managed to stop a nine-month streak of declinesaccording to data from the National Institute of Geography and Statistics (Inegi) released this weekend.

The improvement was reflected after 14 of the country's 21 manufacturing branches had growth in hiring, that is, nine more branches than the five that made progress in March.

At the forefront of the increases was the clothing manufacturing subsector, with an increase of 2.1%, followed by the printing industry (+1.5%), the paper industry (+1.3), leather tanning and finishing (+1.2) and the furniture industry (+0.8%), only to mention the five most dynamic branches.

On the contrary, the five most pronounced declines were experienced in the wood industry (-3.3%), textiles except clothing (-1.5%), and petroleum products (-1.0%). and manufacturing of computing and communications equipment (-0.9%).

The rebound in manufacturing employment draws attention because in April activity in the sector actually contracted 1.5% and dragged down the country's industrial activity, which fell 0.5%. What is a fact is that, both in employment and activity, Manufacturing has performed weaker compared to the bulk of the economy in the last year.

According to the Inegi's Monthly Indicator of Industrial Activity, in 2023 manufacturing activity grew just 0.9%, less than a third of the 3.2% expansion of the economy as a whole.

Meanwhile, employment in the sector contracted 0.3%, after in 2021 it was one of the first sectors of the Mexican economy to recover its pre-pandemic employment levels.

Hours worked decrease

But the greater hiring did not imply a greater use of the labor factor in the different branches of manufacturing during April. Hours worked had a monthly decrease of 0.4% and year after year, the drop is 2.8%.

While salaries, which have generally had a positive behavior due to the increases in the minimum wage in recent years, On this occasion they had a setback of 1% compared to March, although compared to April 2023, there is a gain of 2.2%.

“Difficult reading of the Emim results for April 2024: strong increase in the use of installed capacity while it is estimated that the downward trend in the use of labor factor continues and average salaries for work continue to rise; “This dynamic could be compatible with a change in production technology and the substitution of labor for capital.” said Julio Santaella, former president of Inegi, in his X account.

And he added that “the EMIM estimates that the use of the labor factor in Mexican manufacturing has decreased as of mid-2023: the annual variations in employed personnel and hours worked in April 2024 were -1.3% and -2.8% y/y respectively.”

During the first four months of 2024, total manufacturing employment, in fact, has fallen 1.7%, in contrast to the slight increase of 0.2% that was observed in the same period of 2023.

The worst falls are observed in the branches of clothing manufacturing (-10%), textile input manufacturing (-9.8%), furniture manufacturing (-9.8%)the manufacturing of computer equipment (-9.2%) and the tanning and finishing of leather and skin (-8.8).