Overview of the Construction Sector’s Recent Performance
In February 2025, the construction sector experienced an annual production decline of 16.8%, following a significant drop of 19.2% in January, according to the National Survey of Construction Companies (ENEC) by Mexico’s National Institute of Statistics and Geography (Inegi).
Although there was a slight improvement in February, with a monthly decrease of 0.2% on a seasonally adjusted basis, the construction sector has been in decline for eight consecutive months. Experts predict that public investment shortages and economic uncertainty caused by tariffs will hinder the sector’s recovery in 2025.
Public Infrastructure Investment and Construction Slowdown
ENEC results indicate a slowdown in public infrastructure investment and construction, failing to offset sector losses. In February, transportation and urbanization projects (roads, bridges, railways) saw an annual contraction of 46.6%.
The public budget for such projects in 2025 is 600 billion pesos, a 12.6% reduction compared to the previous year. This budget cut has negatively impacted employment in the formal sector, with a decrease from 4.8 million registered workers in 2024 to 4.6 million in the same year, particularly affecting entities like Mexico City, Tabasco, and Yucatan.
Tariffs’ Potential Impact on Construction
BBVA Research warns that tariffs could affect construction costs, depending on their implementation and structure. While residential construction has shown a slight recovery (2.7% annual growth), driven by private investment in housing, industrial, and commercial buildings, this activity might weaken due to tariffs.
Industrial building construction could slow down because of difficulties in matching 2024’s performance and potential trade agreement setbacks reducing demand. Residential construction faces risks due to housing policies, such as the government’s plan to build 1.1 million affordable homes throughout the six-year term via Conavi and its affiliated construction company.
Key Questions and Answers
- What is the current state of Mexico’s construction sector? The construction sector has experienced an annual production decline of 16.8% in February 2025, following a 19.2% drop in January, according to the ENEC.
- What factors are contributing to the sector’s struggles? Public investment shortages and economic uncertainty caused by tariffs are hindering the sector’s recovery in 2025.
- How have public infrastructure investments affected the construction sector? Public budget cuts for infrastructure projects in 2025 (12.6% reduction) have negatively impacted employment in the formal construction sector.
- What are the potential impacts of tariffs on construction? Tariffs could increase construction costs and weaken residential construction, which has shown slight recovery due to private investment.
