manufacturing and transportation in Mexico
4 min read
4 months ago

Manufacturing and transportation in Mexico will boost employment in the third quarter of 2021

manufacturing and transportation in Mexico

Beyond manufacturing and transportation in Mexico, a wide range of economic sectors perceive that a better environment for hiring will exist between this coming July and September.   This set of circumstances will result in an approximate 9% net overall growth in the country’s labor market participation.

The recovery of the labor market after the impact of the global coronavirus pandemic is expected to take hold in the third quarter of 2021.  Employment growth will be driven by sectors such as manufacturing, transportation, agriculture, and telecommunications.

According to the Manpower Employment Expectations Survey, companies perceive a more encouraging environment for hiring between July and September of this year will exist.  A 9% growth in job creation is expected. This estimate is 2 points above what was observed in the present quarter.

“After the drop that we had in employment last year when the issue of the pandemic grew serious in March, we have been recovering. There was talk of a “U” shaped recovery; however, the recovery has been more in the shape of a ‘W.’ What this trend tells us is that we are above the previous quarter,” stated Alberto Alesi, the Manpower Group’s general director for Mexico, the Caribbean, and Central America.  The economic expansion that is being experienced now is being led, in part, by manufacturing and transportation in Mexico.   Additionally, it is expected that agriculture will grow by 11%, while the communications sector is projected to grow by 10%.

Although “there are encouraging signs across the major industrial sectors of the country, some fundamental activities have not been fully reactivated.  Noteworthy among these are services, commerce, and construction. For this reason, 22% of employers still do not know when Mexico will be able to return to the hiring levels that were achieved before the pandemic”, Alberto Alesi stressed.

In a global comparison, the increase in employment projected for Mexico is far from its leading trading partner: the United States (25%). But it is higher than that of Canada (8%) and even that of South America’s largest economy, Brazil (7%).

The projection of the employers is in line with that of economists. The economic analysts consulted by the Bank of Mexico adjusted their forecast up for the creation of formal positions of employment at the end of 2021. According to the latest survey of expectations, the result of 460,000 jobs this year is projected.  This is an increase of 25,000 places with respect to the estimates made during the previous month.  A significant number of these jobs are anticipated to be created in the sectors of manufacturing and transportation in Mexico.

The recovery of the labor market has also been observed in the National Survey of Occupation and Employment (ENOE) results, with a cumulative 93% of jobs lost in April 2020 due to the health emergency caused by covid-19 and the closure of non-essential economic activities. In April of this year, a million people joined the employed population, all in the formal sector of Mexico’s economy.

Favorable outlook, but with reservations

Although a scenario of a possible re-outbreak of Covid-19 cases recedes as the vaccination plan advances and more people recover from the contagion, the improvement in employment could face some headwinds.  These could include problems in the industrial sector and the outsourcing reform, said Juan Carlos Alderete, director of Banorte’s Economic Analysis.

“We warn of the significant shorter-term risk. In this sense, risk includes limits to production due to lack of inputs and increased costs due to problems in supply chains. This circumstance could result in greater adverse effects, especially in the manufacturing industry. The already announced temporary stoppages of some companies are not likely to translate into heavy job losses. However, if the problems spread, both in time and in affected sectors, the factories could be forced to cut their workforce”, explained the Alderete.

For his part, Ricardo Aguilar Abe, the chief economist of Invex, considered that the lack of business support remains the main risk to job creation in the country. However, the generation of vacancies will continue, mainly in the services sector and as a result of slight growth in the industrial sector.

“We expect job creation to continue, particularly in the tertiary sector where growth has continued to make progress.  It is likely to observe marginal increases in the Economically Active Population of the secondary sector since this (mainly manufacturing) began to recover since the middle of last year”, concluded the analyst.

John Rippee

VP of Global Supply Chain & Logistics

John Rippee

VP of Global Supply Chain & Logistics

Tecma benefits from the disciplines and experiences of John having served in the U.S. military which qualifies him to be Vice President of Tecma’s transportation divisions in both El Paso and San Diego.