While industry growth slowed in June, construction fell

INDEC activity data shows that industry continues to grow, while construction is already showing signs of slowing. In June, manufacturing production has increased by 2.6% since May and 6.9% compared to the same month of 2021.

In the first half, the industry accumulated an expansion of 5.9%. In June there was year-over-year advances in 14 of the 16 industrial branches included in the indicator. The highlight was the growth in machinery and equipment production (18.3%), crude oil refining (12.8%), automotive production (11.2%) and steel (8.9%).

According to a report by the Foundation for Latin American Economic Research (FIEL), in the first half of the year, automotive manufacturing and the metalworking sector were the ones that contributed the most to manufacturing growth.

On the construction side, activity increased by 7.2% in July and the accumulated figure for the first six months of 2022 of the original series index shows an increase of 6.5% compared to the same period in 2021. But compared to May, construction activity fell by 1.8%.

Going forward, the prospects for construction are positive. In the survey carried out by INDEC among entrepreneurs in the sector, 63.2% of those who do predominantly private jobs expect the level of activity will not change in the next three months, while 19.3% estimate that it will increase and 17.5% that it will decrease.

These expectations are supported by growth in economic activity (27.6%), the resumption of public works (24.6%) and new public works plans (21.5%), among other factors.

Among the companies mainly dedicated to public works, 49.3% believe that the level of activity will not change in the period July 2022-September 2022, while 27.4% believe it will increase and 23.3% that it will decrease.

Prospects for the sector

Although at a substantially slower pace than last year, the sector managed to pull off in the first half of 2022 despite multiple headwinds – high inflation, which accelerated to 64% yoy last June, weighing on costs. production, consumption and investment decisions.

The shortage of foreign currency It also outlined a complex scenario for industrial firms, with restrictions on access to dollars to pay for imports that deepened in late June.

“The exchange disorder has had an impact on normal business development,” FIEL commented in his report.

In the first half of the year, many production sectors were affected by logistical problems deriving from the lack of fuel, a key input in freight transport and agricultural activity.

From now on, private forecasts warn that production will continue to slow.

“Moving forward, the scenario is very volatile: To the energy problems that can become more acute during the colder months, we must add the supply problems that are already starting to occur due to the obstacles to the entry of imported supplies, “said consultant Orlando Ferreres in a report.

AQ