The downturn in activity deepened in May with a 5.5% yoy contraction, below the Reuters market estimate of a 3.2% decline, and down from the -4.4% in April. In sequential terms, activity fell for the second consecutive month, with a slight contraction of 0.1% mom/sa in May, after a fall of 1.8% in April. As a result, the EMAE (official monthly GDP proxy) decreased by 2.2% qoq/saar, from a gain of 2.8% qoq/saar in 1Q23.
Primary activities plummeted on a year-over-year basis during the quarter ended in May, affected by the drought. Primary activities fell by a whopping 24.4% yoy in the period (from a drop of 2.1% in 1Q23), affected by a weak grain harvest. In contrast to the weak performance in primary activities, all other sectors expanded in the quarter. Services registered an 8.1% yoy gain in the period, up from 2.9% in 1Q23. Construction came in at 5.8% yoy (from 2.7% previously), followed by Manufacturing with a 1.7% yoy gain (from 2.9% in 1Q23).
Better-than-expected activity in 1Q23 led to the downward revision of our expectation for a contraction this year, from 4% to 3%.