Mexico’s construction sector is experiencing an unexpected rebound, with strong performances in May and June generating predictions of 5.5% growth this year.

According to the firm CIAL Dun & Bradstreet, the industry showed year-on-year growth of 8.2% in May and 11.9% in June, the highest rates seen since 2008.

“Assuming that engineering works continue to grow at high rates, it is estimated that total construction will grow around 5.5% this year,” the analysis reads. “If so, it would represent its best rate since 8.6% [registered] in 2006.”

The report highlights that the sector shrank by 17.3% in real terms as a result of the COVID-19 pandemic, and had struggled to recover due to high inflation. Annual growth of 8.3% in 2021 was discounted in the analysis, attributed to the reactivation of the sector after the collapse during the pandemic. Marginal growth of just 0.3% was registered across the whole of 2022, making 2023’s rebound a surprise to analysts.

Mexico’s construction sector is worth US $133 billion today or 7.6% of national GDP, according to the analysis. It is made up of three sub-sectors: building (67% of the total industry), specialized construction jobs (17.5%) and civil engineering or infrastructure (15.5%).

Of these, the civil engineering sub-sector has performed particularly strongly this year, with 72.7%% annual growth in June (according to national statistics agency INEGI), which CIAL Dun & Bradstreet report is the highest rate since April 1994.

The leap in the construction sector was the major driver of a 3.6% real-terms annual increase in Mexico’s overall economic activity reported in June by INEGI. Other industries that have performed strongly in 2023 include the generation and distribution of electricity, water and gas (3.7%), mining (2.6%) and manufacturing (0.7%).

Construction was also the strongest month-on-month performer, with 2.2% growth in June, and in the six months from January to June, with 4.2% growth.

The INEGI released a similarly positive report on Mexico’s construction industry in July, in which it reported that the sector had registered its highest production value since 2019. Employment in the sector grew 1.8% annually, worked hours by 7.3% and average wages by 3.6%.

That report also highlighted the strong performance of the civil engineering sub-sector, linked to President López Obrador’s flagship infrastructure projects like the Maya Train, the Olmeca refinery and the Isthmus of Tehuantepec trade corridor.

With reports from El Economista and Milenio