Argentina Macroeconomic Perspectives

Argentina: May activity figures signal the start of the rebound, although the recovery is still heterogeneous

• Construction activity rose 2.3% m/m seasonally adjusted in May, strengthening the positive trend of the past four months. Although the main driver is public infrastructure works which increased consequence of the upcoming Presidential election, the private sector also showed improvements. Private sector payrolls rose four straight months, creating close to 12.000 new jobs between January and April. Furthermore, permits surged 22.5% yoy and touched their maximum level in over a year.
• Additionally, industrial production rose 0.6% mom seasonally adjusted in May. After touching a minimum in the first quarter, the trend reversal is more evident. While most major categories remain negative, the recovery is being led by metal industries, oil sector and activities linked to the agriculture sector.
• The strengthening of the peso during the past month and the gradual rate cut by the Central Bank, drove interest rate and exchange rate estimates for the coming months down, although end of year figures were unchanged. Moreover, the outlook for inflation and growth remained stable, similar to the previous month´s report.