Colombia: Manufacturing PMI rises in July
The S&P Global Davivienda Colombia Manufacturing Purchasing Managers’ Index (PMI) improved to 50.0 in July from 49.8 in June. As a result, the index reached the 50.0 no-change threshold, signaling stable manufacturing-sector operating conditions compared to the previous month.
July saw the first increase in new orders in five months, with firms reporting successful advertising and new client acquisitions. Moreover, purchasing activity reached its highest level in six months. Though output decreased for the fourth consecutive month amid persistent cost pressures, subdued sales, capacity constraints and weak demand for certain goods, the decline was softer than in the previous month. That said, firms cut staff at the sharpest clip in eight months due to reduced production requirements.
Regarding prices, input cost inflation reached a 14-month high amid sustained weakness in the peso. However, most firms chose to absorb these additional expenses, rather than pass them on to consumers, leading to a slower and no more than marginal increase in charge inflation. Lastly, business confidence reached a three-month high on expectations of reduced inflationary pressures, increased demand, successful marketing efforts and the launch of new products.
Andrés Langebaek Rueda, chief economist at Davivienda, commented:
“The Colombian economy is registering a slow process of reactivation after the monetary squeeze of previous years. We already observe positive annual growth in variables such as car sales and home sales. […] It is good to know that orders from the manufacturing sector are beginning to react and that twelve-month production expectations are also improving although they continue at levels much lower than the historical average.”