2026/07/10 | Julia Passabom & Mariana Ramirez
Industrial production fell 0.7% YoY in May, below Bloomberg consensus (+0.1%) and our forecast (+0.4%). The previous month was revised slightly higher, to 2.4% from 2.3%. The downside surprise was driven by manufacturing (-1.5% YoY, with 14 of 21 subsectors contracting), construction (-0.3%, mainly reflecting weakness in building construction despite growth in other segments), and utilities (-0.9%, following another contraction in April). In contrast, mining expanded 3.9% YoY, supported by broad-based gains.
On a seasonally adjusted basis, industrial production contracted 0.8% MoM, below both consensus (-0.7%) and our expectation (-0.2%), following a strong increase in April. The decline was broad-based, led by construction (-3.7% MoM, with building construction down 5.7%), while manufacturing (-0.1%, with 11 of 21 manufacturing subsectors declining), mining (-0.1%, with metal mining contracting), and utilities (-0.5%, extending their weak trend) also weakened.
Our take: The weak May print follows a strong April, with construction accounting for most of the downside surprise as activity normalized after an unusually robust performance. We continue to expect private-sector construction to remain soft, although public-sector activity could strengthen toward year-end as budgeted projects gain traction. At the quarterly level, industrial production still points to positive contributions from mining and manufacturing. Looking ahead, we expect momentum to improve in 2H26, supported by public infrastructure spending and a gradual recovery in manufacturing, contingent on easing trade uncertainty. We maintain our 2026 GDP growth forecast at 1.1%.
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