MercoPress. South Atlantic News Agency

Argentina's industry booming: 8.8% in July

Argentine industry is heading for its best quarter of the year with manufacturing activity soaring 8.8% in July compared to the same month a year ago, and so far this year only below the June index of 8.9%.

The index is also above the most optimistic of forecasts according to Argentina's Central Bank monthly survey which averaged 8.3%.

This means that industrial activity in Argentina during the first seven months of 2006 reached 7.6% which is 0.4 points above the same period last year according to the official release from the National Statistics and Census Office.

Furthermore industry capacity was running at 72.7% in July which is only second to last year's October with 73.1%.

With the exception of the paper sector which actually dropped 0.9% compared to July 2005, all other sectors were positive.

Leading the pack was car manufacturing with 33.9% followed by tobacco 16%; construction inputs 13.7%; oil refining 11%; textiles 7.7% and the food industry 6.3%.

Regarding foreign trade Argentina's surplus is forecasted to contract 14.2% in July compared to a year ago given the persistent increase in imports according to market analysts who are anticipating the official release next week.

A survey among Buenos Aires analysts puts the July surplus at an average 1.055 billion US dollars compared to 1.25 a year ago.

Imports are expanding steadily to supply the demand of a booming Argentine economy which this year is expected to grow at an estimated 7%.

However the surplus is forecasted to gradually diminish as industries capacities begin pressing for new investments and the import of capital goods.

But even in the worst of scenarios the trade surplus will not change of sign (from positive to negative) in 2006 or 2007, estimated local analysts.

According to the Central Bank monthly survey July's surplus should be in the range of 1.09 billion US dollars with exports totalling 3.9 billion and imports 2.8 billion.

During the first half to 2006 exports reached 21.5 billion US dollars and imports 15.6 billion with a surplus of 5.9 billion compared to 5.1 billion in the first half of 2005.

Nevertheless 2006 is expected to end with a trade surplus in the range of 10 billion US dollars compared to 11.4 billion last year.