MercoPress. South Atlantic News Agency

Argentine industry contracted 5% in July from June, its steepest monthly drop this year

Year-on-year, the manufacturing industrial production index fell 4.9% from July 2025, while the trend-cycle series was down 0.9% on the month

Argentina's manufacturing output fell 5% in July from June in seasonally adjusted terms, the sharpest monthly decline so far in 2026, the National Institute of Statistics and Census (INDEC) reported on Tuesday.

Year-on-year, the manufacturing industrial production index fell 4.9% from July 2025, while the trend-cycle series was down 0.9% on the month. The cumulative figure for the first seven months of the year shows a 2.6% contraction. The reading interrupts June's rebound, when activity had risen 2.1% year-on-year.

Twelve of the sixteen manufacturing divisions posted annual declines. The largest were in other equipment, appliances and instruments (-31.4%), machinery and equipment (-26.7%), clothing, leather and footwear (-15.9%), textile products (-13%) and non-metallic mineral products (-12.6%). In seasonally adjusted monthly terms, every category fell.

Within machinery and equipment, farm machinery production plunged 46.6% year-on-year, with lower output of tractors, harvesters, self-propelled sprayers and certain implement lines. In electronic equipment, production of computing, television and communications goods fell 49.8%, mainly on reduced manufacturing of mobile phones and televisions.

Economist María Castiglioni, director of C&T Asesores Económicos, said the scale of the monthly decline exceeded expectations and could lead to downward revisions of 2026 growth forecasts. She also noted that July tends to show greater volatility because of the winter holiday period.

The textile sector faces weaker domestic demand alongside stronger competition from imported goods, the statistics agency said. The Argentine Textile Industries Federation said 26,851 formal jobs had been lost in the sector since November 2023 and 750 establishments had closed, and described a shift in the sector's foreign trade: purchases of raw materials, yarn and fabric are falling while imports of finished garments are rising.

A survey by the Argentine Industrial Union found that 47.6% of companies in the sector had difficulty in July meeting at least one payment in full, among wages, suppliers, financial commitments, utilities and taxes. The body said 9.2% were behind on all those items simultaneously, the highest level on record and above the historical average of 4%.

Consultancy Industria y Desarrollo, led by former Industrial Union executive Diego Coatz, attributed the situation to a combination of weak demand, rising costs and adverse financing conditions, and estimated that the sector is seeing “nine closures a day.” The firm said arrears of more than 90 days among industrial companies rose from 0.7% to 3.8% over the past year and a half.

The head of the Association of Automotive Manufacturers, Rodrigo Pérez Graziano, described a period of readjustment in the sector, with production aligned to inventory levels and domestic demand, and called for competitiveness measures including a lower tax burden and new trade agreements.

Construction also declined in July, down 4.5% year-on-year and 4.6% on the month, though it retains a cumulative gain of 1.7% for the year.