The industry says that "staff cuts are increasing" due to falling production and demand.

Industrial companies are facing a difficult situation: the decline in domestic demand and the drop in production have led to staff cuts. This was reflected in a recent report by the Center for Studies of the Argentine Industrial Union (UIA), which warns that job cuts have already exceeded the shift adjustments.

The July survey showed "an increase in companies reducing their workforce compared to both the May report and the same month last year." According to the UIA, this is one of the highest levels in the series , in line with what occurred in April of this year.

"This is the highest proportion of companies with a decline in the series, almost matching the figure for April 2024; for the first time in the last four surveys, staff reductions (19.4%) were higher than the reduction in shifts, suggesting that companies are beginning to move toward job cuts as the next stage of adaptation," the UIA noted.

In July, 36.3% of companies reduced their production compared to the average for the second quarter of the year, compared to 21.8% that recorded increases. In sales, 43.5% reported decreases and only 18.6% reported increases. In exports, decreases reached 30.5% of companies, while increases reached 16.6%, narrowing the gap compared to the previous survey.

In terms of employment, 24.4% of firms reduced their workforce , reaching the highest level in the series (similar to that of April 2024). Furthermore, the number of companies that implemented staff cuts reached 19.4%, a figure that has grown over the last four surveys, while the number of companies that adjusted shifts reached 18.9%.

The decline in domestic demand was the main business concern (40.1%) , primarily related to other industries (22.5%), with household demand accounting for 17.6%. Rising costs were in second place (21.4%), with labor as the main factor, followed by difficulties competing with imported products (19%).

Regarding expectations, optimism towards the future moderated , with a lower proportion of companies expecting improvements in their business economic situation (48.6% vs. 57.8% in the previous survey), in their sector of activity (46.4% vs. 52.2%) and at the country level (53.1% vs. 64.3%).

Thus, a downward trend was observed in the most recent period. Finally, 39.6% of companies needed bank credit, but 42.8% did not access the required amount.

"This restriction is greatest for small and medium-sized businesses, while all large companies have obtained full or partial financing. High interest rates and macroeconomic uncertainty were identified as the main obstacles," the report detailed.

According to the July survey, 44.1% of companies are struggling to meet at least one of the following payments: salaries, suppliers, financial commitments, utility bills, taxes . This percentage is higher than in the last four surveys.

On the other hand, the proportion of companies perceiving a deterioration increased compared to last year. Expectations for the coming year moderated, with a smaller proportion of companies anticipating an improvement in their economic situation, both in their sector of activity and at the national level. Thus, a downward trend was observed in the recent period.