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Manufacturing jobs cut for first time in Colombia in ten months

Staff Writer | December 5, 2018
lthough the health of the Colombian manufacturing sector continued to improve in November, further momentum was lost.
Colombia factory
LatAm   New business growth moderated for the fourth month running
New business growth moderated for the fourth month running, leading to a softer increase in production and the first reduction in employment since January.

Nevertheless, firms purchased additional inputs and remained strongly confident that output will expand over the coming 12 months.

The seasonally adjusted Davivienda Colombia Manufacturing PMI fell for the fourth straight month in November, from 52.0 in October to 51.6, but remained above the critical 50.0 mark that separates growth from contraction.

The latest figure pointed to a softer improvement in business conditions that was the weakest since May.

New order growth softened to a six-month low as greater sales and customer wins at some companies were partly offset by unfavourable demand and competitive pressures faced by other factories.

Output increased at a slower pace in November, curbed by a combination of subdued sales and input shortages at some firms.

Nevertheless, the latest rise in production was the tenth in as many months and stronger than seen on average over the survey history.

The slowdown in new business growth enabled manufacturers to work through their outstanding business, which fell for the first time in three months.

Goods producers purchased additional materials for use in the production process during November, reversing the decline noted in October.

Growth was linked to stockpiling initiatives and near-term output needs.

However, holdings of inputs decreased for the third straight month as suppliers' delivery times continued to lengthen.

The latest deterioration in vendor performance was associated with traffic restrictions, road works and closures.

Stocks of finished goods fell in November, ending a fourmonth sequence of accumulation.

Those companies that reported lower inventories mentioned the fulfillment of sales and shortages of inputs to complete unfinished products.

Factory employment decreased, ending a nine-month sequence of job creation.

According to panellists, low sales and restructuring policies caused the reduction in headcounts.

The rate of contraction was only marginal, however, curtailed by the hiring of additional workers at some plants.

Cost inflationary pressures intensified amid reports of dollar strength and list price adjustment at vendors.

Consequently, factory gate charges were raised as some companies sought to protect margins.

However, the overall rate of selling price inflation was at a one-year low.

Businesses remained strongly confident that output will be higher in 12 months' time, with optimism underpinned by investment intentions, the introduction of new designs and planned expansion into international markets.