Mexico will lose 700,000 jobs in 2009, says industry body

Mexico will see its workforce reduced by 600,000 in the current year as the global economic slump worsens and strains the Mexican economy further, data compiled by the National Confederation of Industrial Chambers of Mexico (CONCAMIN), showed.

The Mexican economy will be further hit because of the H1N1 influenza epidemics that has affected all sectors of the economy and the tourism sector in particular, data showed.

This will squeeze Mexican gross domestic product further down from an earlier estimate of around 6 per cent.

The industrial sector will see a fall of 13 per cent, while the `maquilas' - foreign-owned assembly plants that import machinery and materials duty free and export finished products around the world - will see a fall of 16 per cent, CONCAMIN president Salomon Presburguer said.

They can revert the impact by fostering into the domestic market, Presburguer added.

Mexico has already lost 626,000 jobs with the industry laying off around 323,000 workers, while the country's GDP has dropped to 9.8 per cent.

Domestic production of goods and services dropped 8.2 per cent in in the first quarter of the year, showing the intensity and depth of the deterioration of Mexico's economic activity since 2008.

According to the chamber, this is the second consecutive quarterly decline in national economic activity, the third decline in the industrial sector, with a major erosion of the manufacturing plant and services.

Since the Mexican and US economies are closely linked to each other, the weakening of US domestic demand also saw a drop in household consumption and business investment in Mexico as well.

Industrial production fell 9.9 per cent, as did the its two main components – manufacturing contracted 13.8 per cent and construction declined 7.7 per cent.

Almost 11 of the 21 segments that comprise the manufacturing sector closed the first quarter with double-digit declines, ranging from 10.7 per cent in the manufacture of furniture and related products to 38.3 per cent in the manufacture of transport equipment - mostly the automotive industry.

Those industries with greater overseas linkages, such as assembly of computers, primary metals, machinery and equipment and automotive assembly, among others, reported the first decline in quarter.

Manufacturing for the domestic market, like textiles and clothing, leather and leather products, wood, paper, building materials and industry chemistry, among others also suffered.

The chambers said the measures taken by the Mexican government in recent months to contain the deterioration of the economy and protect jobs are in the right direction and reflect the interest and government's commitment for the production plant.

However, it said, the decline in economic activity as a whole and industry in particular indicate that the instruments used have been inadequate with respect to the magnitude of the problem.