What Jumps Out: Unemployment Falls, Oil Production Rises in Colombia

According to Colombia’s National Administrative Department of Statistics (DANE), unemployment is still at respectable levels. For April, the national reading was 10.7%, down from 11.2% a year ago and in nominal terms there was a 3.5% increase (785k) in the number of people working year over year. There are continuing concerns over female unemployment, which stands at 13.9% versus 8.4% for the male population. Simply not acceptable.

Other data was distinctly mixed. The Banco Davivienda PMI slipped into the red (49.9) during May versus the 52.6 recorded in April. On a much brighter note, the Q1 current account deficit stood at $3.4 billion USD versus the $4.4 billion USD expected — and down from $4.9 billion USD at the end of 2022.

Oil production continues to defy the August headlines that suggested the current administration and the Ministry of Mining and Energy was going to close down production. April production stood at 782,000 bpd, up 4% year–over-year, while year-to-date production is up 3.38% thus far — hardly the apocalypse some were predicting.

The Colombian peso continues to hang tough despite all the white noise around the leadership of President Gustavo Petro leadership — even despite poor oil prices over recent weeks. The reality is that there are multiple factors involved in the peso level — there always have been — and the Colombian economy is still doing just fine when compared to the region. The political blame game over the peso weakness over the past 12 months has little base in economic reality.

The reform process continues, but I am not going to take out too much time as there has been nothing new on the side of health reform, while both the labor and pension bills are still at Base Camp 1 with much climbing ahead.

We also saw disappointing news from Colombia’s poorest region, La Guajira, with Enel Group set to abandon its wind power project that aimed to provide power to 500,000 homes. Ostensibly, this is due to protests from the Wayuu indigenous peoples — which is a crying shame as they would have been one of the main beneficiaries. These are people who are nomadic and recognize no country, frontier, or authority. One wonders how much a lack of communication and education played a role in this dispute.

Colombia’s central bank, Banco de la República, this week made comments on inflation. It has now peaked, and within two years will be back at 3%, according to the central bank. Again, this begs the question, especially looking across the macro data: What did they see in April to raise rates to 13.25%?

The markets saw an MSCI Inc. rebalance give us at least one decent day of volume on the COLCAP, but aside from that it’s still a depressing picture. Much speculation remains over the future performance of Grupo Argos, Grupo SURA and Nutresa, they remain suspended for the meantime.

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