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Colombia PMI February 2022

Colombia: Manufacturing PMI eases in February; conditions continue to improve

The seasonally-adjusted Manufacturing Purchasing Managers’ Index (PMI)—produced by IHS Markit and Davivienda—fell to 52.0 in February from January’s 52.6. February’s result marked the weakest performance since June 2021. Despite the drop, the index remained above the 50-threshold, pointing to a continued, albeit moderating, improvement in business conditions from the previous month.

February’s slowdown was largely due to softer manufacturing output growth. The ongoing strengthening of demand continued to support new orders growth, although it also moderated in February, weighed on by raw material scarcity and inadequate operating capacities. More positively, employment levels rose. Conversely, backlogs increased at a record rate. Meanwhile, delivery times lengthened amid persistent supply chain pressures, staffing shortages and congestion at ports. Turning to prices, a stronger USD and higher raw material costs drove still-elevated input price inflation—although it moderated to an 11-month low—leading to yet another rise in selling prices. Lastly, firms’ optimism remained upbeat with regard to output amid stronger demand expectations.

Andrés Langebaek Rueda, chief economist Bolivar Group at Davivienda, explained:

“The figures that have been appearing so far in 2022 suggest some weakening of demand in Colombia. […] Undoubtedly, the growth of inflation has a lot to do with this situation. At the end of January, the inflation for the poor was higher than 8.0%, reducing the purchasing power of many households in the country. The increase in interest rates that has been taking place by the monetary authority will also contribute to this process in the coming months. It is important to understand that this moderation in demand is necessary because the imbalances in the Colombian economy are large. The important thing is that the economy returns to a more balanced situation without trauma.”

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