MEXICO CITY Mexicos construction sector contracted 2.3 percent year on year in the first quarter due to a squeeze on cash flows and delays to public works spending as a new government took power.
In March, construction activity shrank 5.2 percent from a year earlier, according to the Mexican Chamber of the Construction Industry (CMIC).
"At least 2,000 small and medium-sized enterprises in the construction industry have been facing a liquidity problem," CMIC president Luis Zarate Rocha said.
Federal, state and local governments, and institutions such as the national workers housing fund institute Infonavit, in some cases havent been making payments on time to small and medium-sized enterprises.
"We have a huge liquidity problem, therefore the construction companies have asked to borrow money to make payroll," Rocha said.
Not all governments have delayed payments, he said, noting as exceptions Nuevo León, Sinaloa, Michoacán, Veracruz, Chiapas and Mexico City.
Another factor that affected construction activity in Mexico was the handing over of power to the Institutional Revolutionary Party (PRI).
PRI leader Enrique Peña Nieto was elected Mexicos president last July, but only took office Dec. 1 following disputes to the polls results.
This delayed the rollout of fresh government spending on public works. "The government delayed the presentation of the new national infrastructure program, which also delayed the public works program," CMIC said.
The program is expected to be launched by the end this month, and includes construction and upgrades of the countrys transport networks.
The last six-year plan identified 300 projects. The 2012-18 program is expected to target almost 500 infrastructure projects.
A version of this article was first published by AMM sister publication Steel First.