Industrial activity in the sixth month of the year was better than in May. However, production still feels the demand side
Industrial production registered a 6.1% drop in June compared to the same period last year, but had a significant recovery of 9.4% compared to May, according to the indicator prepared by the FIEL Foundation.
The year-on-year drop in activity in the second quarter was more profound than that registered at the Convertibility exit, the entity warned, although it estimated that the greatest decline seems to have been reached.
The entity said that in June there were “monthly improvements among the industrial branches” compared to the previous month, amid the partial reopening of some sectors ordered by the government around the quarantine.
According to FIEL, corrected for seasonal factors, the activity had a rise of 1.7% during June in relation to the previous month.
Thus, industrial production was at a level similar to that of the first quarter prior to the pandemic.
Also in June, Complete branches -food and beverages, chemical and plastic inputs, and tobacco- achieve year-on-year improvements.
For specific activities, the blackout in June 2019 contributes to improving the year-on-year comparison, added the consultant.
A negative second quarter
Regarding industrial activity in the second quarter, there was a decrease of 19.5% in year-on-year terms, while in the seasonally adjusted measurement, the decrease compared to the first quarter reached 14.8%.
Regarding the performance of the production sectors in the first six months and in the year-on-year comparison, the advance in food and beverage production in the month allowed the semester to close without changes compared to the same period of the previous year.
Textile inputs, chemicals and plastics, pulp and paper production and oil refining accumulated in the semester a drop below the industry average.
In contrast, cigarette shipments, metal mechanics, steel, non-metallic minerals and automotive production accumulated more deterioration than average in the first half of the year and in the year-on-year comparison.
Industry in check: activity plummeted almost 20% in the second quarter.
Government sees “signs of recovery”
Industrial activity showed signs of recovery in June and confirmed the trend during the first days of July, while consumption -measured through purchases with Ahora 12- was improving week by week after an initial drop at the beginning of the pandemic, with greater intensity outside the Metropolitan Area (AMBA), said an official report released last week.
This is clear from the July report of the Center for Production Studies (CEP XXI) of the Ministry of Productive Development, which indicated that “although the production levels prior to the start of Preventive and Mandatory Social Isolation (ASPO) have not yet recovered, the industry went from falling 40% year-on-year between the end of March and the beginning of April, to 12% between June 7 and July 7. ”
The sectors that promoted the improvement in June and in the first days of July were automotive activity -which had been null in April and very reduced in May-; the manufacture of construction materials – which is already almost on positive ground with respect to the pre-quarantine – and tobacco, he said.
In consumption, the report noted that after a contraction of over 80% with the start of quarantine at the end of March, in the first half of June sales at constant prices with Now 12 returned to the levels of the first half of March .
Consumption: The Government is betting on quota plans to revive sales.
The improvement is also seen in the number of businesses with biweekly turnover with Now 12 over $ 10,000, which went from 38,915 in the first half of March to 12,055 in the first half of April, and then recovered and reached 38,299 in the first half of June.
Beyond the improvements in the level of activity, the pandemic has left consequences in the productive fabric: Between February and May, 3.9% of companies stopped sending their affidavits to AFIP, although it is premature to classify them as definitive closings.
Similarly, there was a drop in formal salaried employment in April of 2.2% monthly, the largest since 2002: suspensions soared in April, which explains why the nominal salary fell 7.9% monthly, something unprecedented since at least 1995.
“When the signs of recovery in economic activity and industry impact employment and wages, this negativity in labor indicators will be reversed,” the work said.
On the other hand, one of the positive data left by the pandemic was financial inclusion: Thanks to the Emergency Family Income (IFE), today more than two million people who were unbanked have a bank account.
In addition, the zero-rate credit for monotributistas and self-employed allowed 135,000 new credit cards to be printed; and the payment of wages by the ATP program generated that many companies that previously paid “by hand” to their employees have opened new salary accounts.
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