Daily Mexico News Blog
Free Mexico News Daily in English
Daily Mexico News Blog
Free Mexico News Daily in English

Construction Sector in Mexico Faces Decline in Activity During First Five Months of 2024

Mexico News Blog (MNB) – During the first five months of 2024, the construction sector in Mexico has experienced a decline in activity, preventing its full recovery post-pandemic, as indicated by the National Survey of Construction Companies (ENEC) from the National Institute of Statistics and Geography (Inegi).

On July 24, Inegi presented the ENEC results for May 2024, revealing a 0.8% decrease in the value of production generated by construction companies in real terms compared to the previous month. This marks the fifth consecutive month of decline.

Marginal Growth in Sub-Indicators

Despite the overall decline, the three sub-indicators monitored by Inegi showed marginal growth in their monthly comparisons. According to ENEC, total employed personnel increased by 0.9%, while hours worked saw a 0.7% rise compared to the previous month.

Average wages grew by 0.7% from April, with a 1.8% monthly increase in wages paid to workers. However, wages paid to administrative, accounting, and management employees dropped by 0.5%.

Annual Comparison Shows Mixed Results

In its annual comparison, the value of construction production in May 2024 showed a significant growth of 4.8% compared to May 2023. However, two out of three sub-indicators registered decreases. The total value of employment decreased by 0.6%, and hours worked dropped by 1.4%. On the other hand, average real wages grew by 5.9% in May, marking an annual increase.

Sector Composition and Regional Activity

In May 2024, the sector was composed of civil engineering construction (46.7%), building (42.4%), and specialized construction work (10.8%).

Construction activity was predominantly concentrated in Quintana Roo (11%), Nuevo León (10.1%), Jalisco (5.9%), Campeche (5.2%), Chihuahua (4.6%), Baja California (4.5%), and Mexico City (4.1%). These regions’ activities are largely driven by federal government projects such as the Dos Bocas refinery and the increasing trend towards nearshoring.

Challenges and Outlook

The construction sector in Mexico continues to grapple with the lingering effects of the pandemic, as evidenced by the persistent declines in monthly production value. While there is notable annual growth in production value, the sector’s recovery remains fragile, with employment and hours worked not yet returning to pre-pandemic levels.

The construction sector’s future will depend on various factors, including the continuation and expansion of federal projects, economic policies favoring the industry, and the global economic environment. As the country strives to recover from the pandemic’s impact, close monitoring of the sector’s performance and strategic support from the government will be crucial to ensuring its sustained recovery and growth.

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