Background on the Construction Sector and its Current State
The construction sector is struggling to regain momentum, with the value of production by building companies declining by 17.4% from January to August compared to the same period last year, according to data from Mexico’s National Institute of Statistics and Geography (Inegi). This downward trend has persisted for 16 consecutive months, with August recording a 19.1% annual drop.
Factors Contributing to the Sector’s Struggles
The primary cause of this slump is the lack of public investment in oil-related and transportation projects. This situation has been exacerbated by a previous downturn between May 2017 and April 2021, when the cancellation of the Texcoco airport construction and the COVID-19 pandemic simultaneously impacted the sector.
Hopes for Recovery
Government officials and private sector representatives are optimistic that the construction of new passenger trains, with the recent announcement of the first ruling for 30.30 km of the Querétaro-Apaseo El Grande segment on August 18, will serve as the necessary catalyst to revitalize the industry.
August’s Challenges
In August, the value of production by construction companies fell by 2.9% on a monthly basis (a 2% decrease was reported in July). Over the past year, only two monthly increases have been observed.
- The building segment, which accounts for approximately 51.7% of the total and is primarily developed by the private sector (industrial, commercial, service buildings, and housing), experienced a monthly drop of 0.1% in August (having fallen by 3% in the previous month).
- Transportation and urbanization projects, comprising 20% of the sector (mainly railway and road works), saw a 4.9% decrease from the previous month, following a 1.7% decline.
- The oil and petrochemical segment, making up 4% of the total (including refinery, oil plant, pipeline, and gas pipeline construction), suffered the most significant drop at 24.8% in August, after a 13.6% increase in July.
Employment Impact
According to the monthly report of the National Survey of Construction Companies (ENEC) by Inegi, the total number of employees in construction firms decreased by 0.7% on a monthly basis in August, while the annual rate saw an 11.5% decline.
- Monthly worked hours dropped by 1.1%, and annually, they fell by 13.5%.
- Real average wages experienced a 1.1% decrease in both monthly and annual terms.
