Federal cutbacks hit Argentine construction firms hard

A total of 4,465 construction firms in Argentina stopped operating in the 12 months ending May as contractors reel from the halting of federal financing for public works. 

As of the end of May there were 16,305 active employers in the sector, including subcontractors, a 10.6% year-on-year decrease, according to construction industry statistics institute Ieric.

That does not mean that the firms that are not active are closing but rather that they do not have active projects.

A source from construction chamber Camarco, asking not to be identified, told BNamericas that the crisis in the sector has translated more into layoffs than company bankruptcies.

La Rioja province saw the biggest year-on-year decline for May with a 30.6% drop in active employers, while San Juan was the only one to post an increase, up 4.5% versus a year ago.

In terms of employment, there were 355,618 registered construction workers at the end of May, a 1.1% decrease from April and 19.9% less than 12 months earlier.

NUMBER CRUNCHING

Activity in the construction sector dropped 32.6% year-on-year during May, while it increased 6.2% compared to April, according to national statistics office Indec.

The month-on-month figure is the second increase in a row but the overall activity index remains far below December 2023 numbers and accumulated a 32.2% drop in the first five months of 2024.

Asphalt sales declined 47.8% year-on-year in May, following a 60.6% plunge in April. 

After taking office in December, President Javier Milei cut off federal financing for thousands of public works projects. 

While authorities have announced that some contracts will resume, only a fraction of the affected works will benefit with the rest facing an uncertain scenario.