Colombia: Manufacturing PMI falls in March
Colombia’s manufacturing sector contracted more sharply in March, reflected by a drop in the seasonally-adjusted Davivienda manufacturing Purchasing Managers Index (PMI) from 49.5 in February to 48.9 in March. Thus, the index moved further below the critical 50-point threshold separating expansion from contraction.
March’s reading reflected a fall in output for the third consecutive month and a sharper contraction in new orders, owing to weaker demand. Consequently, firms laid off workers, with a moderate decline in overall employment. Meanwhile, on the price front, cost burdens continued to rise, although the upturn was softer than in February, as higher prices for chemicals, iron, steel and textiles were partially offset by lower prices for aluminum and plastics. Firms in turn raised their output prices only modestly. Despite the fall in the index, business sentiment remained solid on expectations of an increase in demand.
Commenting on the latest print, Andrés Langebaek Rueda, Chief Economist Bolivar Group at Davivienda:
“The PMI suggest, with data below the threshold of 50, that the industrial climate has continued to weaken in the months of February and March. It is striking what happened with new orders, which shows that the lack of demand continues to harm the expansion of the sector. In the midst of this situation, it is interesting to note that cost pressures, despite the devaluation of the Colombian peso in recent months, have been very weak. It is likely that this phenomenon is also related to the loss of dynamism in demand.”