Each month, the Leeco^® Trading team reviews market data and economic news to analyze trading conditions for our key customer regions. The data we examined this month points towards mixed manufacturing and economic conditions in key regional economies during 2020. Here are the top metrics we are looking at this month.

*AS OF DECEMBER 2019

Manufacturing PMI dropped month-over-month in Brazil, Mexico and South Africa, marking the sharpest contraction of factory activity in 2011.

*AS OF OCTOBER 2019

**AS OF SEPTEMBER 2019

Capacity utilization increased month-over-month for Brazil and Mexico on October, while South Africa’s capacity utilization decreased month-over-month in September.

Below is a chart showing import levels of key Latin American countries Mexico, Brazil and Chile, as of December 2019. Imports decreased in both Mexico and Brazil and increased in Chile.

*AS OF DECEMBER 2019

Car production dropped 25% month-over-month in Brazil and 12.7% year-on-year in Mexico during December.

*AS OF NOVEMBER 2019

**AS OF DECEMBER 2019

Mexico’s consumer confidence remained unchanged month-over-month, while Chile’s decreased in November. Intentions to purchase durable goods in Mexico increased.

*AS OF Q3 2019

Mexico’s GDP growth rate was stagnant in Q3, increasing from a 0.1% contraction in Q2. Services activities grew, and industrial output shrank at a softer pace as compared to Q2.

Antonio Rosset, Commercial Director of Leeco Trading, regularly monitors important market indicators to help customers make strategic sourcing decisions and shares what he is watching in the 2020 market.

“I regularly monitor World Bank reports to gauge conditions for our key markets. According to World Bank’s 2020 report, regional growth in Latin America is expected to rise to 1.8%, with growth strengthening in Brazil,” Antonio said. “As a result, we expect to see increased manufacturing and agricultural activity this year. The Leeco Trading team is prepared to meet higher demand for metals and fertilizer products during this period of economic growth.”

Antonio Rosset
Commercial Director

Recent economic news points towards mixed economic and manufacturing activity across key regional markets.

Brazil’s manufacturing PMI dropped to 50.2 in December from 52.9 in November, the slowest expansion pace since July. Economic experts say the sharp drop partially canceled out strong gains made in the sector during October and December. However, with Brazil’s economic conditions expected to improve this year, manufacturing’s overall 2020 outlook improved.

Colombia’s central bank released a statement last month stating that the benchmark interest rate will be held at 4.25%. The bank chief said this rate could remain in place for a “relatively long period,” as inflation and growth risks dropped. Supply shocks that affected inflation in 2019 are expected to subside, and inflation is forecast to reach the target rate of 3% in early 2020.

Mexico auto production and exports are expected to decline in 2020. Auto production is expected to fall to 3.5 million units from 3.75 million last year, and exports are expected to drop to 2.8 million units from 3.3 million last year. 2019 marked a slow year for the industry, with production dropping 4.1% year-over-year and exports declining for the first time in a decade.

The World Bank cut South Africa’s 2020 economic growth forecast to 0.9% amid electricity supply concerns. The revision was announced when Eskom Holdings, who generates about 95% of the country’s electricity, resumed rolling blackouts earlier than expected. The World Bank stated that electricity supply and infrastructure constraints will inhibit domestic growth.