Argentina's manufacturing, construction shrink to start 2022

Key sectors of Argentina's economy contracted at the start of the year, posting their worst performance in months, as the government seeks to strike a deal with the International Monetary Fund.

Industrial production contracted 5.5 percent in January from the previous month on a seasonally adjusted basis – its worst drop since May.

Construction activity declined 3.9 percent in the same period – its steepest one-month decline since early 2020. 

Both sectors also declined on an annual basis, according to government data released by the INDEC national statistics bureau on Wednesday.

Argentina's automotive sector led the manufacturing slump in January, down 12 percent from a year earlier, while furniture, food and metal factories also posted annual declines. After adding jobs for six months, construction firms reduced hiring slightly in December, the most recent month for which employment data are available.

Argentina's government is nearing a US$45-billion deal with the IMF, in which officials have emphasised the need for public policy to invest in real economy sectors such as manufacturing and construction to boost economic growth. 

The agreement, if approved, aims to increase infrastructure spending above two percent of gross domestic product.