Colombia: Manufacturing activity falls more sharply in August
The Davivienda Global Manufacturing Purchasing Managers’ Index (PMI) fell to 46.8 in August from July’s 48.4. August’s result marked the worst performance since May 2021. As such, the index fell further below the 50.0 no-change threshold, signaling a sharper deterioration in manufacturing sector operating conditions compared to the previous month.
Demand fell at the sharpest pace since mid-2021, leading output to decline at the sharpest rate since November 2022. One reason for this was high interest rates, according to respondents of the PMI survey. The decline in activity came despite the sharpest decline in input and output prices in series history. Meanwhile, weak activity led manufacturers to trim their headcounts for the fourth consecutive month. Finally, business sentiment remained optimistic, buoyed by hopes of lower inflation and interest rates ahead.
Davivienda’s Andrés Langebaek Rueda said:
“As we have previously mentioned, the slowdown of the Colombian economy this year is inevitable given the rise in interest rates aimed at correcting the excess demand observed in the previous year. Let us remember that during 2022 Latin America grew at a rate of 3.9% while Colombia did so at 7.3%.”