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Manufacturing industry in Colombia remains in expansion mode

Staff Writer | June 4, 2018
Business conditions in the Colombian manufacturing sector continued to improve, with growth of order books, production, employment and input purchasing sustained in May.
Manufacturing in Colombia
Colombia   The upturn was curbed by the presidential election
However, rates of expansion softened in all cases.

Anecdotal evidence suggested that the upturn was curbed by the presidential election and weaker-than-expected sales.

Nevertheless, goods producers were strongly optimistic towards growth prospects, with the level of positive sentiment climbing to a series peak.

The seasonally adjusted Davivienda Colombia Manufacturing PMI posted above the no-change mark of 50.0 for the third month in a row during May, signalling a further strengthening in the health of the sector.

That said, the headline figure fell from 52.1 in April to 51.1, highlighting a slowdown in growth.

Although new business inflows continued to increase, the rate of expansion softened from April's 19-month peak.

A weaker rise in output was likewise noted in May, with the upturn the slowest in three months.

According to survey participants, the expansion was underpinned by the securing of new work from domestic and external sources, with pending contracts having been signed over the month.

At the same time, growth was reportedly undermined by uncertainty arising from the 2018 presidential election.

Goods producers continued to hire additional workers, but job creation moderated amid the non-replacement of voluntary leavers at some factories.

Nevertheless, the upturn in workforce numbers was sufficient to enable the completion of outstanding work, as signalled by a renewed decline in backlogs.

Inventory trends showed similar patterns, with both pre- and post-production stocks falling slightly in May.

The decrease in holdings of raw materials and semi-finished items occurred due to a combination of weaker input purchasing and delivery delays among suppliers.

Indeed vendor performance deteriorated further during May, with panellists linking longer lead times to floods, landslides and road closures.

May data showed a moderation of input cost inflation across Colombia's manufacturing sector.

Companies cited higher prices paid for chemicals, metals, plastics and textiles, but the overall rate of inflation was at a three-month low.

Conversely, output charges increased at the quickest pace since last September as some firms sought to pass through to their clients ongoing rises in cost burdens.

Finally, manufacturers were at their most upbeat since confidence data were first collected in April 2012.

Boosting sentiment were hopes that market conditions will improve after the elections.

Firms also cited export opportunities, new collections and business expansion plans as potential drivers of output growth.


 

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