Industry at pandemic levels as sector registers worst drop in 16 months

The manufacturing sector took a heavy hit in July, further prolonging the crisis it has been experiencing since the implementation of President Javier Milei’s austerity plan.

According to official data from statistics bureau INDEC, industrial activity fell 4.9% year-over-year in July. Cumulative decline in 2026 stands at 3%.

The most alarming figure, however, was the 5% monthly decline, which reversed the slight increases seen in the previous two months.

This is the sharpest monthly decline in a year and a half (in March 2025, there was a 5.8% drop) and the third-largest monthly decline since the libertarian administration took office (the worst was 6.5% in December 2023, the month Milei took office).

The fall means industrial activity fell back to levels last seen during the semester of 2024, when the brunt of Milei’s fiscal austerity policy was felt, and the pandemic.

Comparing seasonally adjusted activity levels through the INDEC’s industrial production index (IPI), the sector’s performance stands at 112.3 points. In August 2020, the figure was also 112.3.

A list of affected sectors

Manufacturing sector is down 9% overall compared to November 2023, the last month before the change in government.

Of the 16 industrial sectors under analysis, 13 have posted negative growth since Milei took office. In 8 of those cases, the declines are in the double digits, according to estimates by consulting firm LCG based on official data.

The textile industry leads the losses at -41%, followed by machinery (-29%), non-metallic minerals (-28%), other equipment (-27%), metal products (-25%), apparel (-22%), the automotive sector (-21%), and tobacco (-11%).

Only the food industry (+3.3%), oil refining (+12.6%), and other transportation equipment — motorcycles — (+2.9%) showed increases during that period.

Consulting firm ACM reached a similar conclusion, stating that comparisons between July 2026 and November 2023 reveal an “incomplete and uneven recovery, with isolated winners and a broad segment that continues to lag behind.”

A difficult future

Consulting firm LCG does not see any “drivers” that would spur a recovery in the short and medium term.

“The sector’s rising delinquency rates, depressed domestic demand, competition from imports, and dollar-denominated inflation are all factors dragging it down,” they argued.

One of these factors is low activity in the construction sector, a major consumer of inputs from local industry that is also in recession due to the halt in public works mandated by Milei.

Construction activity fell 4.6% month-over-month and is 25% below November 2023 levels, according to LCG.

ACM noted that in the coming months, the focus will be on which industrial sectors will be able to maintain their current levels and which could lead to a potential recovery.

“[Sectors] that showed the greatest resilience in 2025 have a head start, while the sectors that lagged behind may continue to adjust for longer,” they stated.

In this context, they noted that the direction of trade policy and progress on investment agreements “may open up opportunities for some supply chains, although they may also maintain competitive pressure in the most exposed segments.”