MercoPress. South Atlantic News Agency

Argentina’s industrial activity increased 9.6% in May says Industrial Union

Automobiles and steel industries led the manufacturing index

Argentina’s industrial activity increased 9.6% in May, in comparison to the volume registered in the same month of 2010, the Argentine Industrial Union reported on Tuesday. With this result, the industrial activity accumulated a 9.2% increase in the first five months of 2011.

UIA figures are largely in line with the Argentine government's data. The national statistics agency, Indec, reported a May industrial production rise of 9% on the year, with the gain during the first five months of the year also at 9%.

While manufacturing was up sharply, some industries underperformed, the UIA said. “The sectors with the most traction were automobiles, followed by metal-works and base metals, which accounted for close to 75% of all growth,” the UIA said.

Production of foodstuffs expanded at a more moderate pace of 4.4%, largely due to the bumper output a year earlier and a high base of comparison, according to the UIA.

Manufacturing has surged over the past twelve months alongside the overall economy. Argentina's GDP is likely to expand by 7.5% to 8% this year, following 9.2% growth in 2010, according to the government.

Domestic sales of cars, electronics and home appliances are booming, thanks to double-digit inflation and hefty salary hikes negotiated by unions ahead of next October’s presidential election. Inflation is also fueling a consumer spending spree as Argentines pour their money into durable goods as a hedge against the peso's loss of purchasing power.

Automobile production in May was up 33% on the year, with 79,585 vehicles rolling off assembly lines, according to the auto makers' association, Adefa. Auto exports, 81% of which go to Brazil, rose 36% on the year to 52,715.

Raw steel production in May totaled 495.800 metric tons, up 13.1% on the year and 4.6% on the month, according to the steel chamber Acero. Steel production during the first five months of the year reached over 2.24 million tons, up 10.6% from the same year-earlier period, and steelmakers are operating at 80% capacity.