Construction in Mexico: recovering, but still a long way to go

Extract of the article published in Plaza de Armas (www.plazadearmas.com.mx), May 2nd 2011.

Construction represents 6% of the National GDP, and 8% of the employment. Besides, according to the Mexican Chamber of Construction, this sector has a direct influence in the development of other 37 economic sectors that are suppliers of materials and services. That’s why, traditionally, the economic sector is considered as a good indicator of the economic health of a country.

In Mexico, although the national economy has recovered the levels it had at 2008 1^st Q, construction is still 7% below the peak it had 3 years ago; in other words, it is at the levels it had at beginnings of 2007… so far, 4 years lost for the sector.

Elaborated by Atalaya, with data from INEGI.

(Seasonally adjusted, constant currency)

2008 1^st Q=100

A good result is that during the 4 quarters of 2010, it had a growing trend that resulted in a growth of 4.2% (you can read precedents of Construction and other economic sectors here).

What has happened at the beginning of 2011? The most recent figures come from the National Survey of Construction Companies, that do not represent the total of the sector, but let us know the level of activity of those companies by State and by kind of construction. According to the survey, the first 2 months of the year show an increase of 5.3% compared with the same months of 2010, in all the kinds of construction, including buildings (housing, schools, offices, industrial and commercial buildings, hospitals, etc.), that was the sector with more lags.

The perspectivas for the resto f the year are of growth. The Chamber has an estimate of 2.6%, less than the one obtained the last year; but other estimates of commercial banks gathered by the same Chamber has an average estimate of 4.5% growth. If this last forecast is fulfilled, the sector will be hardly reaching the levels it had at the end of 2007, still behind the peak of 2008; so, the perspectives keep positive but there is still a long way to go to have a total recovery.

In Queretaro, 2009 and 2010 had annual falls of 7.7% and 7% respectively. 2011 begins with an important growth in building and hydraulic constructions. Last week, the Secretary of Sustainable Development in the municipality of Queretaro announced the arrival of $4,000 million pesos in investments for executive hotels, industries, services and commerce companies. So, all the companies that participate in the productive chains for these constructions will have different opportunities during the year if the investments arrive.