Colombia: PMI drops in May from April's 19-month high
June 1, 2018
The seasonally-adjusted Davivienda manufacturing Purchasing Managers Index (PMI) dropped to 51.1 in May after rising to a 19-month high of 52.1 in April. The index moved closer to the critical 50-point threshold that separates expansion from contraction in manufacturing output.
Business conditions in the manufacturing sector continued to improve, with sustained growth in order books, production, employment and input purchasing, although the rate of expansion moderated in all cases due to uncertainty arising from the presidential election and weaker-than-expected sales. Output rose at the slowest pace in three months and the expansion was driven by new business from both domestic and external markets. Goods producers, however, remained optimistic about growth prospects, with sentiment climbing to a survey-record high. Backlogs of work continued to decline as firm hired additional workers, although the rate of job creation weakened in the month. While input prices moderated in May, output charges rose at the swiftest stride since last September as some firms passed on the higher burden of cost adjustment onto consumers. Sentiment among manufacturers was at the highest level in the survey history on expectations that market conditions will improve after the elections; firms cited export opportunities, new collections and business expansion plans as the main potential growth drivers.
Commenting on May’s PMI reading, Andrés Langebaek Rueda, Chief Economist Bolivar Group at Davivienda, stated:
“…everything seems to indicate that manufacturing activity will continue to expand, that the slowdown observed in May corresponds to a temporary phenomenon and that activity will continue with a good dynamic in the coming months."
Author: Nihad Ahmed, Economist