Colombian Update June 4th : Whats New (s) : Exports, Vehicles, PMI, Holidays.

colombianexports

EXPORTS JUMP BUT WORK TO DO

An encouraging reading for April with the FOB number standing at US$3.71bn - up a lumpy 38.5% YoY and over US$200mn above analysts expectations - if we take a look at 2018 thus far we stand at US$13.28bn which is 16.6% ahead of where we were in 2017 - on a 12m basis we are 16% up....all good stuff. Breaking it down we find no major surprises especially in oil and extractables which rose 46.3% YoY and contributed 2/3 of the total increase - in terms of total FOB this category accounted for 58.4% of the total. If we bore down one level we find that crude oil rose 17.2% but it was coal (ex coking based products) which rose 105.5%% YoY and which was the main driver of the jump in the overall sector - coking coal's 141.3% increase was none too shabby either but is a minor contributor - gas also trucking along. Looking elsewhere there was a very encouraging 47.5% increase in the manufactured goods being dispatched overseas which represents around 23% of the total increase and 20% of the total FOB dollar number, boring down we find sizeable contributions from Vehicles (+173.1%), Iron & Steel (+381%) & Fertilizers (+271%) reflecting good diversity and in fact in this category only 6 of the 34 sectors measured saw declines. Looking at the number from another angle which is arguably a better yardstick for the economy we find that overall tonnage of was up 42.1% YoY in April and is now up 11.1% YTD however when look at it this way arguably it isn't such a rosey picture for areas outside of the traditional industries. The extraction sector contributed fully 92% to the extra tonnage (oil & gas clearly) whilst despite a 59.9% increase in tonnage manufacturing only contributed 3% to the large increase - whilst no one can deny the value of 28/34 sectors expanding clearly there is work to do in this area because one day down the road oil will not be the holy grail that it currently is the country will need a far more diverse industrial base. PMI Moving right along we come to the fledgling PMI report for May which came in at 51.1 which was down on the 52.1 registered in April but hopefully is no more than a blip for an index that has recovered from the lows of 45.4 seen exactly one year before, We have seen confidence recover over the past year amongst consumers, retailers and the industrial sector and that should continue to be reflected in the PMI data.

Note : When this index was initiated at the beginning of 2018 was I the only one thinking why it has taken so long to get off the ground especially in a country that has so many different macro reference points being published during the year - congratulations to Davivienda for taking this initiative.

VEHICLES The vehicle sector has suffered like few others with the demise of the oil prices since 2014, after the boom years of new vehicle registrations the Peso which was last seen below 2000 in 2014 has weakened notably and this has impacted on non-essential purchases from overseas - the most fortunate in Colombia will never be impacted by such trivial matters but once you move down the economic scale we find a middle income group who have decided that they don't need a new car every two years or have decided to utilize the used vehicle sector which has effectively only come into existence over the past five years...but perhaps there are signs of optimism on the horizon. May sales stood at 20,522 which was a modest improvement of 3.1% YoY whilst YTD sales stand at 94,903, again a modest increase (1.9%) versus 2017 but moving in the right direction. It is a sector which is ordinarily very hard to project due to the seasonality of sales but in 2018 it is even more difficult due to the ongoing elections which have kept the handbrake on consumers however import and retail sales numbers suggest that consumer durables are starting to come into play. Interest rates have likely bottomed and confidence is rising, on top of that we have seen a sizeable appreciation in the Peso due to oil prices, last year the modestly stronger Peso wasn't enough to move the sales needle, hopefully this year the combination of aforementioned factors can get registrations back to the 250,000 level - I know some PM's see this as a barometer of economic health.

(ONLY IN) COLOMBIA CORNER So I sit here writing on a long weekend which will be the first of 6 over the next 12 weeks - the maths are pretty simple - I would though be prepared to bet you a pretty penny that if you stood on a local street corner that of the first 100 people you stopped 95 wouldn't be able to name three of them - for the record :

• Corpus Christi

• Sacred Heart of Jesus

• St Peter & Paul

• Independence Day

• Battle of Boyaca

• Assumption

Let's add to that the small matter of the World Cup, school holidays and on top of that the developed world holidays - well, you get the picture.