Manufacturing slipped in March. The IPI manufacturing index declined by 4.5% mom/sa in March, after rising by 0.3% mom/sa in February. Moreover, industry output fell by 2.7% qoq/sa in 1Q25, following a 1.7% expansion in 4Q24. On an annual basis, manufacturing rose by 5.2% in March, and by 6.1% in 1Q25. Eight of nine sectors grew in March on an annual basis, except for petroleum refining, chemicals, rubber and plastics products. According to the INDEC survey, 27% of companies expect an annual increase in internal demand over the next three months, 44.1% expect a decline and 28.9% foresee no changes.
Construction also declined. The construction index fell by 4.1% mom/sa in March, after rising 2.1% mom/sa in the previous month. However, construction rose by 2.2% qoq/sa in 1Q25 (-1.1% qoq/sa in 4Q24). Construction activity rose by 15.8% yoy in March and by 5.6% yoy in 1Q25. Employment in the sector contracted by 0.5% relative to February 2024 (figures have a one-month lag). According to a qualitative survey, 73.9% involved in private construction expect no changes in activity levels over the next three months. Meanwhile, 14.0% expect an increase and 12.1% anticipate a decline. Among companies primarily engaged in public works, 20.4% anticipate a decrease in activity levels during the next three months, while 55.3% expect no change and 24.3% expect an increase.
Our take: We see the sequential contraction in the manufacturing and construction sectors in March as temporary, in the context of rising uncertainties about the official exchange rate framework. As a result, our GDP growth forecast for 2025 remains at 4.5%, but with upside risks due to high carryover.