Mexico's construction industry contracts in the 3Q19

Mexico's construction industry contracted 6.6 per cent YoY during the third quarter of 2019, its worst period since the first quarter of 2009, due to lack of public work and fewer Infrastructure.

Cement production in Mexico fell by 12.1 per cent in September to 3.160Mt, compared with the year before, according to Instituto Nacional de Estadistica Y Geografia (INEGI). In the year to September 2019, accumulated cement volumes reached 29.801Mt, representing a fall of 21.1 per cent.

The decline in volumes has impacted domestic cement producers, with Cemex seeing its operating flow decrease by about 22 per cent this year, which in turn resulted in a smaller cash generation to cover its debt. For the rest of the year the company is expected to have a 5-9 per cent drop in its sales volumes in Mexico. However, it is forecast to return to moderate single-digit growth in 2020, according to CE NAFTA.

The recovery is expected to be due in part to the National Private Sector Infrastructure Agreement, which will see the investment of MXN589bn (US$3.01bn) over the next five years for 147 projects.