Mexico’s Fixed Investment, Construction Continue to Contract

Mexico’s investment in fixed assets continued to decline in September 2025, reflecting persistent weakness across construction, industrial activity, and housing markets. According to INEGI’s latest Monthly Indicator of Gross Fixed Capital Formation (IMFBCF), fixed investment fell 0.3% month over month and 8.4% annually, marking one of the steepest yearly contractions in recent years. 

The data shows that construction spending dropped 2.6% in September, with residential works contracting 3.9% and non-residential projects falling 0.9%, while machinery and equipment increased 1.9% monthly but still declined 6.1% annually. Imported capital goods registered a 3.8% monthly rise, contrasting with a 0.5% fall in domestic machinery. Original figures reveal deeper deterioration: total fixed investment declined 6.7% annually, construction plunged 10.6%, and public-sector construction collapsed 35.7%, underscoring the severity of the contraction.  

This investment downturn aligns with broader industrial weakness. Mexico’s industrial activity contracted 0.4% in September 2025, marking the fourth consecutive monthly decline, while annual output fell 3.3%, its seventh straight decrease. The construction sector was responsible for much of the contraction, falling 7.2% annually, led by a 27.2% collapse in civil engineering works due to sharply reduced public investment. 

Edification also decreased by 5.6%, whereas specialized construction activities grew 8.6%, the only subsector to show resilience. Other industrial sectors also weakened: mining fell 3.1% annually, driven by a 6% drop in mining services and a 3.1% decline in oil and gas extraction, while electricity, water, and gas services decreased 0.2%.

Structural inefficiencies have intensified the sector’s slowdown. According to Eduardo Orozco, Regional Business Director, Trimble, construction remains the world’s second most inefficient industry after agriculture. He notes that nine out of 10 projects globally are delivered late and over budget, and 30% of work on construction sites is rework. Orozco emphasizes the role of Building Information Modeling (BIM) in reversing these inefficiencies, explaining that designing with lifecycle cost considerations can significantly reduce long-term expenditures. 

The contraction trend has continued all year long. September’s INEGI ENEC survey shows that construction activity sharply deteriorated in August 2025, with production value falling 2.9% month over month and 19.1% year over year. Employment in the sector dropped 0.7% monthly and 11.5% annually, with non-permanent workers falling 2.8% and hours worked decreasing 1.1% monthly and 13.5% annually. Real wages decreased 1.1% both monthly and annually, with laborers seeing sharper declines than administrative personnel. 

Regional performance was uneven: Baja California, Guerrero, Sonora, Tlaxcala, and Baja California Sur recorded annual growth, while Campeche, Tabasco, Oaxaca, and Durango posted double-digit declines. Mexico City, one of the country’s largest construction hubs, registered an annual downturn of over 11%, reflecting widespread weakness.

Mid-year data from BBVA Research further confirms the sector’s downturn. The construction sector’s GDP fell 1.1% annually in mid-2025 due to a 12.6% real reduction in public infrastructure spending. The sector is split between a growing private building segment and a collapsing civil works segment. Private building construction grew 4.9% and logged its eleventh consecutive quarter of expansion, driven by resilient residential development and recovering bank credit. 

However, civil works contracted 24.6% in the 1H25, marking its fourth straight quarterly decline. Employment also weakened: total construction workers dropped from 4.8 million to 4.6 million, and IMSS-registered jobs fell from 1.9 million to 1.7 million. Infrastructure production collapsed 32.1% annually in June 2025 and 37.4% in the first half of the year, with the transportation sector showing the deepest losses, followed by hydraulic works and energy infrastructure, which recorded a MX$10 billion loss.

Despite the sector’s weakness, BBVA Research forecasts a gradual recovery beginning in 2026. Three factors are expected to support this rebound: an 8.6% real increase in the 2026 public infrastructure budget, a recovery in construction credit after reaching a low point in 2025, and a revival in residential building supported by new national housing programs aimed at expanding access to affordable housing. If these conditions materialize, Mexico’s construction and fixed investment sectors could return to positive growth next year, reversing part of the sustained decline observed throughout 2025 and laying the foundation for broader stabilization across industrial, investment, and housing markets.