Manufacturing dropped sequentially in January. The IPI manufacturing index fell by 1.3% mom/sa in January, marking the second consecutive decrease. However, industry output rose by 0.8% qoq/sa in the quarter ended in January, following a 1.9% expansion in 4Q24. On an annual basis, manufacturing rose by 7.1% in January, and by 4.3% in the quarter ended in that month. All sectors grew in January on an annual basis, except for metals. According to the INDEC survey, 28.7% of companies expect an annual increase in internal demand over the next three months, 29% expect a decline and 42.3% foresee no changes.
Construction also contracted sequentially in January. The construction index fell by 1.0% mom/sa in January, following two consecutive gains. However, construction rose by 2.3% qoq/sa in the quarter ended in January (-1.1% qoq/sa in 4Q24). Construction activity contracted by 1.3% yoy in January and dropped 13.4% yoy in the quarter ended in that month. Employment in the sector contracted by 9.8% relative to December 2023 (figures have a one-month lag). According to a qualitative survey, 69.2% involved in private construction anticipate no changes in activity levels over the next three months. Meanwhile, 18.7% expect an increase, while 12.1% anticipate a decline. Among companies primarily engaged in public works, 21.1% anticipate a decrease in activity levels during the next three months, while 47.8% anticipate no change and 31.1% an increase.
Our take: We expect GDP growth of 4.5% this year, after a contraction of 1.8% in 2024, despite the decline in leading indicators at the beginning of the year. In our view, activity points to strong growth this year, helped by a high carry-over from 2024 (2.6% according to the GDP proxy EMAE), still supported by the recovery in real wages and a more friendly investment environment. The national accounts for 4Q24 will be released on March 19 and the EMAE for January on March 27.
