ARGENTINA – Manufacturing and construction declined sequentially in July

Manufacturing fell in July. The IPI manufacturing index decreased by 2.3% mom/sa in July, after falling by 1.6% in June. However, industry output rose by 0.9% qoq/sa in the quarter ended in July, following a 0.9% expansion in 2Q25. On an annual basis, manufacturing fell by 1.1% in July and increased by 4.5% in the quarter ended in that month. Four of the nine sectors grew on an annual basis in July. According to the INDEC survey, 21.8% of companies expect an annual increase in internal demand over the next three months, 38.9% expect a decline and 39.3% foresee no changes.

Construction contracted in July. The construction index fell by 1.8% mom/sa in July, after increasing 1.1% in the previous month. Despite the sequential monthly contractions, construction rose by 0.3% qoq/sa in the quarter ended in July (2.2% qoq/sa in 2Q25). Construction activity increased by 1.4% yoy in July and by 7.8% yoy in the quarter ended in that month. Employment in the sector increased by 4.8% relative to June 2024 (figures have a one-month lag). According to a qualitative survey, 68.0% of those involved in private construction expect no changes in activity levels over the next three months. Meanwhile, 10.6% expect an increase and 21.4% anticipate a decline. Among companies primarily engaged in public works, 22.2% anticipate a decrease in activity levels during the next three months, while 62.6% expect no change and 15.2% expect an increase.

Our take: The contractions in the manufacturing and construction sectors in July were in line with our expectations. While supply-side data has fluctuated along a similar level for several quarters, the monthly GDP proxy has been essentially flat since the end of 1Q25. Our 2025 GDP growth forecast of 5.0%, mainly reflects carryover from last year, with recent data raising downside risks to our call.