Colombia: Manufacturing PMI falls markedly in December; conditions still improve
The seasonally-adjusted Manufacturing Purchasing Managers’ Index (PMI)—produced by IHS Markit and Davivienda—fell to 53.1 in December from November’s 54.9. Despite the fall, the index remained above the 50-threshold, signaling a continued, albeit softer, improvement in business conditions compared to the prior month.
December’s slowdown came amid a moderation in production growth, which posted the slowest rate in six months, partly constrained by raw material shortages. The material shortages, coupled with limited shipping container availability and transportation issues, led to an increase in cost inflation, with firms partly passing on the burden to customers. More positively, firms continued to onboard staff in December and new orders—the largest sub-component—expanded at a quicker pace, aided by a general improvement in demand. Lastly, business confidence dropped to a seven-month low in December, weighed on by fears of persistent supply bottlenecks and elevated price pressures in 2022.
Pollyanna De Lima, economics associate director at IHS Markit, commented:
“The PMI results for December showed a further loss of growth momentum among Colombian manufacturers as supply-side issues had a cascading effect on the sector. […] The positive takeaway from the latest PMI results came from the demand-side of the economy, with companies seeing a stronger increase in factory orders despite a sharp rise in prices charged for their goods.”