2026/07/08 | Diego Ciongo & Soledad Castagna
Manufacturing activity increased in May, partially recovering from the decline recorded in the previous month. The manufacturing component of the IPI rose by 0.4% MoM/SA, partially reversing the 1.8% contraction seen in April. Industrial output also increased by 1.5% QoQ/SA in the quarter through May. However, in annual terms, manufacturing activity remained weak, declining by 5.7% YoY in May and by 1.2% YoY in the rolling quarter ending that month.
Construction activity followed a similar pattern, rebounding in May after a weak April. The construction index rose by 6.3% MoM/SA, following a 3.5% decline in the previous month. The sector also maintained positive quarterly momentum, expanding by 3.7% QoQ/SA in the three months through May. On an annual basis, construction activity increased by 4.1% YoY in May and by 4.4% YoY in the rolling quarter.
Our take: We maintain our 2026 GDP growth forecast at 3.5%, supported mainly by primary sectors—particularly agriculture, energy, and mining. The ongoing disinflation process and lower interest rates should continue to support a recovery in real incomes and, consequently, private consumption. We also expect private investment to gradually gain traction, although the persistent annual decline in capital goods imports suggests that the investment cycle has not yet fully bottomed out. In addition, the low statistical carryover from 1Q26 poses downside risks to activity growth this year.