Colombia: Manufacturing PMI returns to expansionary territory in July
August 1, 2019
Business conditions in Colombia’s manufacturing sector improved in July. The seasonally-adjusted Davivienda manufacturing Purchasing Managers Index rose from 49.2 in June to 51.5, thus moving above the critical 50-point threshold separating expansion from contraction. Thus, manufacturing activity returned to growth in July after swinging to contraction in June and comes as welcome news compared to falling output in Brazil and Mexico.
A revival in new orders drove the turnaround in the manufacturing sector. Sales expanded at the fastest pace since October last year and overall output rose at the swiftest rate in ten months as firms sought to rebuild their stocks of finished goods to deal with the upturn in new business. Backlogs of work rose accordingly and manufacturers resumed their in-take of workers, although the rate of hire was marginal. On the price front, input costs climbed as a stronger U.S. dollar lifted prices for imported materials and prompted firms to raise their output prices as they sought to protect margins. Lastly, business sentiment was more upbeat, reaching a four-month high, thanks to a brighter outlook on sales growth and expansion into new markets.
Author: Nihad Ahmed, Economist