- Colombia: March’s retail sales and manufacturing beat expectations, partly explained by calendar effects
On Wednesday, May 14th, the National Institute of Statistics (DANE) published manufacturing production and retail sales data for March 2025. Manufacturing production increased 4.9% y/y, above market expectations (1.9% y/y), and retail sales increased 12.7% y/y above market expectations (10.0% y/y). March’s result is partially due to a calendar effect, as Easter fell in March in 2024 but in April in 2025, generating a low base of comparison. Therefore, the seasonally adjusted data showed only a 0.3% y/y acceleration in manufacturing production. In the case of retail sales, the recovery was due to a surge in demand for durable and semi-durable goods, affirming that Colombia is experiencing a robust first stage in the economic recovery. It will be important to monitor if recent FX depreciation has some impact on imported prices, and if so if there is any slowdown in household demand, added to a context of very sticky services prices that leave inflation reluctant to go down. For now, we still see private demand as the main driver of the economic recovery in 2025.
As in February, manufacturing output increased by 4.9% y/y a figure mostly explained by calendar effects (chart 1). March results showed a positive performance in the manufacturing sector compared to the previous year (chart 2). However, the seasonally adjusted data showed an 0.3% y/y expansion, which suggest that the boost in the original data is due to Easter last year and a lower comparison base; additionally, we saw a -1.1% m/m contraction. In this context, cleaning products, food, apparel, and chemicals contribute to the increase, offset by beverage, sugar, iron and steel, oil and fuel industry and pharmaceutical products.
Retail sales continued their positive trend for the tenth consecutive month, showing a significant expansion. In March, retail sales increased by 12.7% y/y (chart 3), explained by a boost in vehicle sales, telecommunication equipment sales, and durable goods such as household appliances and other domestic products, which together explained 83% of total growth. As in February, it is important to highlight the increase in the apparel sector since January, after almost two years of contraction, but this could be explained by a base effect due to the 9.3% y/y drop in March 2024. In contrast, alcoholic and non-alcoholic beverages were the activities that registered a drop in the period. The overall positive performance in retail sales is taking place in a context in which interest rates remain high and inflation hasn’t normalized completely, and it could suggest that households in Colombia are getting used to the current context and engaging their consumption decisions with better confidence. A curious characteristic in the consumption recovery is that households are using credit moderately and instead the savings buffers remain solid, leading us to think that the recovery has stronger bases compared to the post-pandemic rebound.
In monthly seasonal adjustment terms, retail sales in March (excluding other vehicles) decreased slightly by -0.05% m/m. However, the performance in retail sales offers further signs of the start of a new cycle (chart 4) in which commerce is expected to drive economic growth in 2025, despite the increases in informality.
On Thursday, May 15th, DANE will release the general picture of economic activity for Q1-2025. Yesterday’s data skew to the upside of our GDP forecast, which is currently at 2.5% y/y. It will be relevant to monitor whether the sectors that had a positive dynamic during the first half of 2024 would lose traction due to transitory effects in agriculture and public administration, restricted by a tight fiscal position. Despite the economic performance at the beginning of 2025 being a reason for the central bank to maintain caution, the Board decided to resume the easing cycle with a 25bps cut in the last meeting (April 30th) in line with Scotiabank Colpatria’s expectations. In our take, despite economic activity performing well, the output gap remains negative, that said, despite today’s numbers are not a concern, we see room for a rate cut in BanRep’s meeting of June 27th, taking the rate to 9%, this meeting is taking place after the Medium-Term Fiscal Framework release (June 13th), so it will be also important to see market reaction to fiscal news as if the MoF release decent news, the monetary policy could consider moderate the contractionary stance.
Highlights:
- Manufacturing production increased 4.9% y/y. 28 of the 39 activities showed annual expansion. On the positive side, cleaning products (+16.2% y/y), food (+13.3% y/y in average), apparel (+15.6% y/y), chemical industry (+16.8% y/y) and electrical appliances (+12.8% y/y) contributed +3.6 p.p. to the result. On the negative side, beverage industry (-4.8% y/y), sugar (-22.7% y/y), iron and steel industry (-13.7% y/y) and oil and fuel industry (-3.5% y/y) were the main sectors offsetting the boost in the period, contributing with -1.9 p.p.
- Retail sales grew by 12.7% y/y. 17 of the 19 activities registered gains. Vehicle sales (+32.8% y/y for household vehicles and +21.7% y/y for other ones), telecommunications equipment sales (+53.9% y/y), and household appliances such as electronic devices and furniture (+19.4% y/y) were the ones that contributed the most to retail sales growth. It’s important to highlight the increase in apparel sales since January (+2.5% y/y) after almost two years of contraction, but still below pre-pandemic performance. Meanwhile, alcoholic, and non-alcoholic beverages (-5.6% y/y in average) remain with a negative trend.
- From April 2024 to March 2025, retail sales expanded by +5.4% y/y where apparel sales experienced the greatest deterioration with a drop of 7.3%, while the sales of telecommunications equipment, the ones that have had the best contribution to the result with an expansion of +30.5. Furthermore, the manufacturing output dropped -0.2% y/y explained by the pharmaceutical industry (-8.2% y/y), oil and fuel production (-5.2% y/y) and minerals industry (-5.8% y/y). In contrast, cleaning industry (+5.3%) and transport equipment (+32.9%) maintain a positive contribution in the indicator.
—Jackeline Piraján & Valentina Guio
DISCLAIMER
This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.
Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.
Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.
This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.
™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.
Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.
Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.