Colombia PMI May 2020

Colombia

Colombia: Manufacturing PMI records another historic low in May

June 1, 2020

The seasonally-adjusted Davivienda manufacturing Purchasing Managers’ Index came in at dismal 37.2 in May, marking the second-lowest reading on record. The index was up slightly from April’s nosedive to a record-low of 27.2 amid lockdown restrictions and a halt in the global economy due to the coronavirus pandemic. The PMI lies far below the critical 50-threshold and indicates a deterioration in the manufacturing sector.

Behind the dismal reading was sharp declines in both output and new orders in May. Although some manufacturers were able to resume operations after closing due to lockdown measures, this was typically at a reduced capacity. Firms reported that domestic and foreign clients largely remained closed in May and, accordingly, jobs were shed for a second consecutive month. Meanwhile, cost inflationary pressures rose sharply in the month, on the back of a stronger U.S. dollar and shortages of some materials as the coronavirus pandemic hit supply chains. On a brighter note, business sentiment improved in the month, although still remained at a low historical level.

Industrial production is seen falling 5.9% this year, pummeled by supply-chain disruptions, production closures and diving demand as a result of the Covid-19 pandemic. Next year, industrial production is seen rebounding and growing 4.0%.


Author: Angela Bouzanis, Lead Economist

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