Alert on Economic Activity: June Estimated to Remain Under Pressure Following Worse-Than-Expected May

Against market expectations, economic activity recorded its second consecutive monthly decline in May and again reflected a heterogeneous scenario among sectors. Furthermore, preliminary data for June indicates that the negative trend is likely to continue, with a decline in mass consumption and a persistent drop in key sectors of the economy, such as construction and iron and steel production, among others.

Looking ahead to June, Max Capital detailed that 14 of the 22 high-frequency indicators they monitor (which include industrial activities, construction, consumption, and exports) showed negative monthly variations in the sixth month of the year, suggesting "an even weaker dynamic for economic activity." However, this monitor does not include indicators from the agricultural sector, which could provide a positive bias, they added.

Economist Gabriel Caamaño from Outlier stated that "unfortunately, the preliminary data for June is worse than that of May," although he clarified that, since May was surprisingly negative, that effect "might compensate a bit." "It is confirmed that activity continues to run well below expectations. Expectations will continue to be revised downward," the expert opined.

Market sources warned that "care must be taken with the monthly estimate," considering that a rebound was expected in May. "It may end up averaging," they noted.

After the official May data was published by INDEC, the consultancy Equilibra estimated that the economy would have remained stable in June compared to the previous month, while the Monthly Economic Activity Estimator (EMAE) excluding primary sectors (which excludes agriculture, mining, energy, and fishing) would fall by 0.5% monthly, accumulating three consecutive declines.

"It seems difficult to expect that in the short term the growth of the most dynamic sectors such as mining, oil and gas, and agriculture will translate into a significant boost for the rest of the economy," they contributed from LCG to the discussion, where they also expressed: "And while greater stability seems like a necessary condition, the absence of a clear driver for domestic demand, a paralyzed labor market, credit suspended due to high delinquency rates, and very positive real interest rates limit the expansion of the rest of the sectors."

Sector by sector: which ones show negative data in June

To start with, in June, the Construya Index (IC), which measures the evolution of quantities sold to the private sector of construction products manufactured by the companies that comprise it, recorded a 2% monthly decline and a 0.6% year-on-year drop. Additionally, according to the report from the Portland Cement Manufacturers Association (AFCP), cement shipments fell by -1.4% compared to the previous year, -0.8% compared to May, and in the accumulated data for 2026, it decreased by -3%.

Beyond construction, metallurgical activity also showed negative data during the past month: it presented a year-on-year decline of 4.6% and a 0.3% drop compared to May of this year, according to the monthly report from the Association of Metallurgical Industrialists of the Argentine Republic (ADIMRA). This monthly decline continues to push the annual accumulated numbers into the red, as the sector has recorded a contraction of 5.7% so far in 2026.

There are also data from the automotive sector. According to the report from the Association of Automotive Dealers of the Argentine Republic (ACARA), during the sixth month of the year, 45,995 vehicles were registered, a year-on-year decline of 12.8%. However, on a monthly basis, there was a recovery compared to May, with a monthly increase of 7.2%. But, the year-to-date total returns to negative territory: in the first half of the year, 9.9% fewer units were registered compared to 2025.

Regarding credit to the private sector, the latest report from the Central Bank revealed that consumer loans contracted by 0.8% monthly in real terms, with declines of the same magnitude in credit cards and personal loans. Year-on-year, both lines remain in negative territory, with reductions of 4.2% in credit card financing and 1.1% in personal loans.

Finally, retail sales in the SME segment indicated that the month-on-month measurement showed a decline of 1.3%. With these results, an accumulated contraction of 2.5% was consolidated during the first half of the year. Only a year-on-year advance of 0.9% was recorded, according to the Argentine Confederation of Medium Enterprises (CAME).

Based on this preliminary data, Equilibra predicted that "the second quarter of the year shows a decline of almost 1% without seasonality compared to the first quarter, explained by the fact that primary sectors fall by 2.5% (compared to the record wheat harvest) and non-primary sectors by 0.5%. In the same vein, from UBA Economics, they considered that "it is very difficult for the second quarter not to be negative, which would interrupt seven consecutive months of recovery."

"The consistently disparate evolution of sectors suggests a reconfiguration of our economy with a greater weight of extractive activities and a lesser industrial participation, they deepened. In that sense, they emphasized that "the weak link of the new productive composition remains labor" and that "as long as growth remains so concentrated in a few sectors, it will be difficult to perceive a rebound in labor income throughout the country."

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