Description

The firms surveyed perceive that the economy continues to adjust, maintaining the pace of recent quarters, which has been in line with their projections, in contrast to past reports when they expected a more abrupt deterioration. 

Regarding the performance of the firms in the last quarter, most of the respondents noted that the downward trajectory continued, but at a slower pace than in previous months. This comes against a backdrop where cost pressures have continued to ease, selling prices are largely unchanged and sales levels have declined. 

The labor market remains loose, as hiring is becoming progressively less difficult. The firms report staffing levels similar to those of the previous quarter and add a slight increase in the search for new employees. The interviews reveal no significant changes in the number of employees, although they remain vigilant about the future evolution of their businesses' performance. 

Financial conditions continue to be described as tight, mainly due to high interest rates, longer delays in credit approval and a decrease in the amounts offered. Credit requests by firms remain limited, with an increase in the reasons associated with refinancing or payments to suppliers.

Going forward, those surveyed expect better results from their businesses. However, they mention that sales levels are their main concern ahead, a factor that is higher compared to year-ago levels. It should be noted that there is growing heterogeneity among the firms surveyed regarding how they perceive the intensity of the deterioration and when they expect the rebound to begin. 

The firms foresee that some factors currently affecting their businesses would moderate, with costs increasing slightly, sales remaining unchanged and margins showing signs of milder tightening than in the past. In this scenario, they expect their selling prices to remain stable.

As for inflation expectations, the percentage of firms that expect inflation to rise well above normal over the next 12 months shows a significant reduction, while those that expect inflation to be slightly above or similar to normal are up.