Background on the Relevant Person or Entity
The Mexican construction sector has been a vital component of the country’s economy, with numerous companies contributing to infrastructure and housing development. One such entity is the Instituto Nacional de Estadística y Geografía (INEGI), Mexico’s official statistics agency, which regularly publishes data on various economic sectors, including construction. INEGI’s Encuesta Nacional de Empresas Constructoras (ENEC) provides insights into the construction industry’s performance, including production value, employment, and wages.
Key Developments in July 2023
According to the latest data from INEGI, the production value of construction companies experienced a 1.3% monthly decline in July, reversing the positive trend observed in June when it grew by 0.9%. On an annual basis, the construction sector’s production value fell by 17.7%.
Building Sector Performance
The decline in July was primarily driven by a 2.9% drop in construction activities related to the building segment, which includes private investments in residential, industrial, commercial, and service buildings. These activities account for approximately 50% of the total construction sector output. In June, this segment had shown growth of 2.8%, suggesting an early sign of recovery.
Transportation and Urbanization Sector
In contrast, the transportation and urbanization segment, comprising roads, bridges, airports, and railway projects, witnessed its second consecutive monthly increase of 0.1% in July. However, the benefits of the federal government’s ongoing passenger train construction projects will only start to reflect in construction companies’ production values by the last quarter of 2023, as licitation processes have been prolonged due to various inquiries from interested firms.
Employment and Wages
INEGI’s ENEC report also highlighted a 0.7% monthly decrease in total personnel employed by construction companies, with non-dependent workers (contracted through other entities for fees or commissions) experiencing a 1.6% decline and dependent employees seeing a 0.7% reduction.
- Hours Worked: Decreased by 0.2% monthly and 13.7% annually.
- Real Average Remuneration: Increased by 0.5% monthly and 2.1% annually.
Key Questions and Answers
- What caused the decline in construction companies’ production value? The primary reason for the 1.3% monthly drop in July was the 2.9% decline in building-related construction activities, which account for around half of the total construction sector output.
- How has the transportation and urbanization segment performed? This sector experienced its second consecutive monthly increase of 0.1% in July, but the benefits of ongoing passenger train construction projects will only be visible by the end of 2023.
- What changes have been observed in employment within the construction sector? Total personnel employed by construction companies decreased by 0.7% in July, with non-dependent workers experiencing a 1.6% decline and dependent employees seeing a 0.7% reduction.
- How have working hours and wages been affected? Working hours decreased by 0.2% monthly and 13.7% annually, while real average remuneration increased by 0.5% monthly and 2.1% annually.
