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PMI slides amid quicker fall in sales in Colombia

Christian Fernsby ▼ | April 2, 2019
The health of Colombia's manufacturing sector worsened in March to a greater extent than in February amid a faster contraction in new work and renewed job cutting.
LatAm   Quantities of purchases continued to decrease, despite input cost easing
Although production declined further, the reduction lost strengthColombiaMeanwhile, pre- and post-production inventories fell.

Quantities of purchases continued to decrease, despite input cost inflation easing to the weakest rate in over fourand-a-half years.

Business conditions worsened in March, as has been the case in the year-to-date.

Falling from 49.5 in February to 48.9, the seasonally adjusted Davivienda Colombia Manufacturing PMI indicated a quicker deterioration.

Moreover, the average quarterly reading for Q1 (49.0) was the lowest since the final quarter of 2017.

Relatively large falls were seen for two of the five sub-indices composing the PMI, namely new orders and employment.

The decrease in sales was moderate, but picked up from February.

Panel members reported weak underlying demand.

Subsequently, job shedding was resumed after growth had been recorded in February for the first time in four months.

That said, employment decreased at a moderate rate.

In addition to subdued sales, firms linked the fall to the nonreplacement of voluntary leavers.

Manufacturing production fell for the third month in a row, with survey participants mentioning challenging economic conditions, weak demand and fewer sales volumes.

In contrast to the trend for new work, the contraction in output softened during March.

Input cost inflation moderated for the fourth successive month in March as higher prices for materials such as chemicals, iron, steel and textiles were partly offset by lower charges for aluminium and plastics.

The upturn in overall cost burdens was the weakest since August 2014.

Similarly, there was a softer rise in factory gate charges.

The increase seen in March was the slowest in 16 months and only slight.

Some businesses indicated that sales-boosting initiatives prevented them from hiking their fees.

March data pointed to a lack of pressure on the capacity of manufacturers' operations, but some issues at supply chains.

Goods producers were able to lower their backlogs of work to the greatest extent since December 2017.

Suppliers' delivery times lengthened on the back of environmental car restrictions, road closures and freight consolidation efforts.

Longer lead times, coupled with a further fall in input purchasing, led to another drop in pre-production stocks.

The pace of depletion was marked and faster than seen on average over the series history.

A modest and slower reduction was noted for inventories of finished goods.

Business sentiment was the second-highest recorded over the past six months.

Predictions of better demand and new client wins were among the reasons underpinning optimism.

Also, firms reported plans to invest in new machinery and advertising, as well as expand product lines.